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113th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     113-423

======================================================================



 
      SUCCESS AND OPPORTUNITY THROUGH QUALITY CHARTER SCHOOLS ACT

                                _______
                                

 April 29, 2014.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Kline, from the Committee on Education and the Workforce, submitted 
                             the following

                              R E P O R T

                         [To accompany H.R. 10]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Education and the Workforce, to whom was 
referred the bill (H.R. 10) to amend the charter school program 
under the Elementary and Secondary Education Act of 1965, 
having considered the same, report favorably thereon with an 
amendment and recommend that the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Success and Opportunity through 
Quality Charter Schools Act''.

SEC. 2. REFERENCES.

  Except as otherwise specifically provided, whenever in this Act a 
section or other provision is amended or repealed, such amendment or 
repeal shall be considered to be made to that section or other 
provision of the Elementary and Secondary Education Act of 1965 (20 
U.S.C. 6301 et seq.).

SEC. 3. SUBPART HEADING; PURPOSE.

  (a) Subpart Heading.--The heading for subpart 1 of part B of title V 
(20 U.S.C. 7221 et seq.) is amended to read as follows: ``Charter 
School Program''.
  (b) Purpose.--Section 5201 (20 U.S.C. 7221) is amended to read as 
follows:

``SEC. 5201. PURPOSE.

  ``It is the purpose of this subpart to--
          ``(1) improve the United States education system and 
        education opportunities for all Americans by supporting 
        innovation in public education in public school settings that 
        prepare students to compete and contribute to the global 
        economy;
          ``(2) provide financial assistance for the planning, program 
        design, and initial implementation of charter schools;
          ``(3) expand the number of high-quality charter schools 
        available to students across the Nation;
          ``(4) evaluate the impact of such schools on student 
        achievement, families, and communities, and share best 
        practices between charter schools and other public schools;
          ``(5) encourage States to provide support to charter schools 
        for facilities financing in an amount more nearly commensurate 
        to the amount the States have typically provided for 
        traditional public schools;
          ``(6) improve student services to increase opportunities for 
        students with disabilities, limited English proficient 
        students, and other traditionally underserved students to 
        attend charter schools and meet challenging State academic 
        achievement standards;
          ``(7) support efforts to strengthen the charter school 
        authorizing process to improve performance management, 
        including transparency, oversight, monitoring, and evaluation 
        of such schools; and
          ``(8) support quality accountability and transparency in the 
        operational performance of all authorized public chartering 
        agencies, which include State educational agencies, local 
        educational agencies, and other authorizing entities.''.

SEC. 4. PROGRAM AUTHORIZED.

  Section 5202 (20 U.S.C. 7221a) is amended to read as follows:

``SEC. 5202. PROGRAM AUTHORIZED.

  ``(a) In General.--This subpart authorizes the Secretary to carry out 
a charter school program that supports charter schools that serve 
elementary school and secondary school students by--
          ``(1) supporting the startup of charter schools, and the 
        replication and expansion of high-quality charter schools;
          ``(2) assisting charter schools in accessing credit to 
        acquire and renovate facilities for school use; and
          ``(3) carrying out national activities to support--
                  ``(A) charter school development;
                  ``(B) the dissemination of best practices of charter 
                schools for all schools;
                  ``(C) the evaluation of the impact of the program on 
                schools participating in the program; and
                  ``(D) stronger charter school authorizing.
  ``(b) Funding Allotment.--From the amount made available under 
section 5211 for a fiscal year, the Secretary shall--
          ``(1) reserve 12.5 percent to support charter school 
        facilities assistance under section 5204;
          ``(2) reserve not more than 10 percent to carry out national 
        activities under section 5205; and
          ``(3) use the remaining amount after the Secretary reserves 
        funds under paragraphs (1) and (2) to carry out section 5203.
  ``(c) Prior Grants and Subgrants.--The recipient of a grant or 
subgrant under this subpart or subpart 2, as such subpart was in effect 
on the day before the date of enactment of the Success and Opportunity 
through Quality Charter Schools Act, shall continue to receive funds in 
accordance with the terms and conditions of such grant or subgrant.''.

SEC. 5. GRANTS TO SUPPORT HIGH-QUALITY CHARTER SCHOOLS.

  Section 5203 (20 U.S.C. 7221b) is amended to read as follows:

``SEC. 5203. GRANTS TO SUPPORT HIGH-QUALITY CHARTER SCHOOLS.

  ``(a) In General.--From the amount reserved under section 5202(b)(3), 
the Secretary shall award grants to State entities having applications 
approved pursuant to subsection (f) to enable such entities to--
          ``(1) award subgrants to eligible applicants for opening and 
        preparing to operate--
                  ``(A) new charter schools;
                  ``(B) replicated, high-quality charter school models; 
                or
                  ``(C) expanded, high-quality charter schools; and
          ``(2) provide technical assistance to eligible applicants and 
        authorized public chartering agencies in carrying out the 
        activities described in paragraph (1) and work with authorized 
        public chartering agencies in the State to improve authorizing 
        quality.
  ``(b) State Uses of Funds.--
          ``(1) In general.--A State entity receiving a grant under 
        this section shall--
                  ``(A) use not less than 90 percent of the grant funds 
                to award subgrants to eligible applicants, in 
                accordance with the quality charter school program 
                described in the State entity's application approved 
                pursuant to subsection (f), for the purposes described 
                in subparagraphs (A) through (C) of subsection (a)(1);
                  ``(B) reserve not less than 7 percent of such funds 
                to carry out the activities described in subsection 
                (a)(2); and
                  ``(C) reserve not more than 3 percent of such funds 
                for administrative costs which may include technical 
                assistance.
          ``(2) Contracts and grants.--A State entity may use a grant 
        received under this section to carry out the activities 
        described in subparagraphs (A) and (B) of paragraph (1) 
        directly or through grants, contracts, or cooperative 
        agreements.
          ``(3) Rule of construction.--Nothing in this Act shall 
        prohibit the Secretary from awarding grants to States that use 
        a weighted lottery to give slightly better chances for 
        admission to all, or a subset of, educationally disadvantaged 
        students if--
                  ``(A) the use of weighted lotteries in favor of such 
                students is not prohibited by State law, and such State 
                law is consistent with laws described in section 
                5210(1)(G); and
                  ``(B) such weighted lotteries are not used for the 
                purpose of creating schools exclusively to serve a 
                particular subset of students.
  ``(c) Program Periods; Peer Review; Grant Number and Amount; 
Diversity of Projects; Waivers.--
          ``(1) Program periods.--
                  ``(A) Grants.--A grant awarded by the Secretary to a 
                State entity under this section shall be for a period 
                of not more than 5 years.
                  ``(B) Subgrants.--A subgrant awarded by a State 
                entity under this section shall be for a period of not 
                more than 5 years, of which an eligible applicant may 
                use not more than 18 months for planning and program 
                design.
          ``(2) Peer review.--The Secretary, and each State entity 
        receiving a grant under this section, shall use a peer review 
        process to review applications for assistance under this 
        section.
          ``(3) Grant awards.--The Secretary shall--
                  ``(A) for each fiscal year for which funds are 
                appropriated under section 5211--
                          ``(i) award not less than 3 grants under this 
                        section;
                          ``(ii) wholly fund each grant awarded under 
                        this section, without making continuation 
                        awards; and
                          ``(iii) fully obligate the funds appropriated 
                        for the purpose of awarding grants under this 
                        section in the fiscal year for which such 
                        grants are awarded; and
                  ``(B) midway through the grant period of each grant 
                awarded under this section to a State entity, review 
                the grant to determine whether the State entity will 
                meet the agreed upon uses of funds in the State 
                entity's application, and if not, reallot the grant 
                funds that will not be used for such agreed upon uses 
                of funds to other State entities during the succeeding 
                grant competition under this section.
          ``(4) Diversity of projects.--Each State entity receiving a 
        grant under this section shall award subgrants under this 
        section in a manner that, to the extent possible, ensures that 
        such subgrants--
                  ``(A) are distributed throughout different areas, 
                including urban, suburban, and rural areas; and
                  ``(B) will assist charter schools representing a 
                variety of educational approaches.
          ``(5) Waivers.--The Secretary may waive any statutory or 
        regulatory requirement over which the Secretary exercises 
        administrative authority except any such requirement relating 
        to the elements of a charter school described in section 
        5210(1), if--
                  ``(A) the waiver is requested in an approved 
                application under this section; and
                  ``(B) the Secretary determines that granting such a 
                waiver will promote the purpose of this subpart.
  ``(d) Limitations.--
          ``(1) Grants.--A State entity may not receive more than 1 
        grant under this section for a 5-year period.
          ``(2) Subgrants.--An eligible applicant may not receive more 
        than 1 subgrant under this section per individual charter 
        school for a 5-year period, unless the eligible applicant 
        demonstrates to the State entity not less than 3 years of 
        improved educational results in the areas described in 
        subparagraphs (A) and (D) of section 5210(8) for students 
        enrolled in such charter school.
  ``(e) Applications.--A State entity desiring to receive a grant under 
this section shall submit an application to the Secretary at such time 
and in such manner as the Secretary may require. The application shall 
include the following:
          ``(1) Description of program.--A description of the State 
        entity's objectives under this section and how the objectives 
        of the program will be carried out, including a description--
                  ``(A) of how the State entity--
                          ``(i) will support the opening of new charter 
                        schools, replicated, high-quality charter 
                        school models, or expanded, high-quality 
                        charter schools, and a description of the 
                        proposed number of each type of charter school 
                        or model, if applicable, to be opened under the 
                        State entity's program;
                          ``(ii) will inform eligible charter schools, 
                        developers, and authorized public chartering 
                        agencies of the availability of funds under the 
                        program;
                          ``(iii) will work with eligible applicants to 
                        ensure that the eligible applicants access all 
                        Federal funds that they are eligible to 
                        receive, and help the charter schools supported 
                        by the applicants and the students attending 
                        the charter schools--
                                  ``(I) participate in the Federal 
                                programs in which the schools and 
                                students are eligible to participate;
                                  ``(II) receive the commensurate share 
                                of Federal funds the schools and 
                                students are eligible to receive under 
                                such programs; and
                                  ``(III) meet the needs of students 
                                served under such programs, including 
                                student with disabilities and English 
                                learners;
                          ``(iv) will have clear plans and procedures 
                        to assist students enrolled in a charter school 
                        that closes or loses its charter to attend 
                        other high-quality schools;
                          ``(v) in the case in which the State entity 
                        is not a State educational agency--
                                  ``(I) will work with the State 
                                educational agency and the charter 
                                schools in the State to maximize 
                                charter school participation in Federal 
                                and State programs for charter schools; 
                                and
                                  ``(II) will work with the State 
                                educational agency to adequately 
                                operate the State entity's program 
                                under this section, where applicable;
                          ``(vi) will ensure each eligible applicant 
                        that receives a subgrant under the State 
                        entity's program to open and prepare to operate 
                        a new charter school, a replicated, high-
                        quality charter school model, or an expanded, 
                        high-quality charter school--
                                  ``(I) will ensure such school or 
                                model meets the requirements under 
                                section 5210(1); and
                                  ``(II) is prepared to continue to 
                                operate such school or model, in a 
                                manner consistent with the eligible 
                                applicant's application, after the 
                                subgrant funds have expired;
                          ``(vii) will support charter schools in local 
                        educational agencies with large numbers of 
                        schools identified by the State for 
                        improvement;
                          ``(viii) will work with charter schools to 
                        promote inclusion of all students and support 
                        all students once they are enrolled to promote 
                        retention;
                          ``(ix) will work with charter schools on 
                        recruitment practices, including efforts to 
                        engage groups that may otherwise have limited 
                        opportunities to participate in charter 
                        schools, and to ensure such schools do not have 
                        in effect policies or procedures that may 
                        create barriers to enrollment of students, 
                        including educationally disadvantaged students, 
                        and are in compliance with all Federal and 
                        State laws on enrollment practices;
                          ``(x) will share best and promising practices 
                        between charter schools and other public 
                        schools, including, where appropriate, 
                        instruction and professional development in 
                        core academic subjects, and science, 
                        technology, engineering, and math education, 
                        including computer science;
                          ``(xi) will ensure the charter schools 
                        receiving funds under the State entity's 
                        program meet the educational needs of their 
                        students, including students with disabilities 
                        and English learners;
                          ``(xii) will support efforts to increase 
                        quality initiatives, including meeting the 
                        quality authorizing elements described in 
                        paragraph (2)(E);
                          ``(xiii) in the case of a State entity not 
                        described in clause (xiv), will provide 
                        oversight of authorizing activity, including 
                        how the State will approve, actively monitor, 
                        and re-approve or revoke the authority of an 
                        authorized public chartering agency based on 
                        the performance of the charter schools 
                        authorized by such agency in the areas of 
                        student achievement, student safety, financial 
                        management, and compliance with all applicable 
                        statutes and regulations; and
                          ``(xiv) in the case of a State entity defined 
                        in subsection (i)(4), will work with the State 
                        to provide assistance to and oversight of 
                        authorized public chartering agencies for 
                        authorizing activity described in clause 
                        (xiii);
                  ``(B) of the extent to which the State entity--
                          ``(i) is able to meet and carry out the 
                        priorities listed in subsection (f)(2); and
                          ``(ii) is working to develop or strengthen a 
                        cohesive statewide system to support the 
                        opening of new charter schools, replicated, 
                        high-quality charter school models, or 
                        expanded, high-quality charter schools;
                  ``(C) of how the State entity will carry out the 
                subgrant competition, including--
                          ``(i) a description of the application each 
                        eligible applicant desiring to receive a 
                        subgrant will submit, including--
                                  ``(I) a description of the roles and 
                                responsibilities of eligible 
                                applicants, partner organizations, and 
                                management organizations, including the 
                                administrative and contractual roles 
                                and responsibilities;
                                  ``(II) a description of the quality 
                                controls agreed to between the eligible 
                                applicant and the authorized public 
                                chartering agency involved, such as a 
                                contract or performance agreement, how 
                                a school's performance in the State's 
                                academic accountability system will be 
                                a primary factor for renewal or 
                                revocation of the school's charter, and 
                                how the State entity and the authorized 
                                public chartering agency involved will 
                                reserve the right to revoke or not 
                                renew a school's charter based on 
                                financial, structural, or operational 
                                factors involving the management of the 
                                school;
                                  ``(III) a description of how the 
                                eligible applicant will solicit and 
                                consider input from parents and other 
                                members of the community on the 
                                implementation and operation of each 
                                charter school receiving funds under 
                                the State entity's program; and
                                  ``(IV) a description of the planned 
                                activities and expenditures for the 
                                subgrant funds for purposes of opening 
                                and preparing to operate a new charter 
                                school, a replicated, high-quality 
                                charter school model, or an expanded, 
                                high-quality charter school, and how 
                                the school or model will maintain 
                                financial sustainability after the end 
                                of the subgrant period; and
                          ``(ii) a description of how the State entity 
                        will review applications;
                  ``(D) in the case of an entity that partners with an 
                outside organization to carry out the State entity's 
                quality charter school program, in whole or in part, of 
                the roles and responsibilities of this partner;
                  ``(E) of how the State entity will help the charter 
                schools receiving funds under the State entity's 
                program consider the transportation needs of the 
                schools' students; and
                  ``(F) of how the State entity will support diverse 
                charter school models, including models that serve 
                rural communities.
          ``(2) Assurances.--Assurances, including a description of how 
        the assurances will be met, that--
                  ``(A) each charter school receiving funds under the 
                State entity's program will have a high degree of 
                autonomy over budget and operations;
                  ``(B) the State entity will support charter schools 
                in meeting the educational needs of their students as 
                described in paragraph (1)(A)(x);
                  ``(C) the State entity will ensure that the 
                authorized public chartering agency of any charter 
                school that receives funds under the State entity's 
                program--
                          ``(i) adequately monitors each charter school 
                        in recruiting, enrolling, and meeting the needs 
                        of all students, including students with 
                        disabilities and English learners; and
                          ``(ii) ensures that each charter school 
                        solicits and considers input from parents and 
                        other members of the community on the 
                        implementation and operation of the school;
                  ``(D) the State entity will provide adequate 
                technical assistance to eligible applicants to--
                          ``(i) meet the objectives described in 
                        clauses (vii) and (viii) of paragraph (1)(A) 
                        and paragraph (2)(B); and
                          ``(ii) recruit, enroll, and retain 
                        traditionally underserved students, including 
                        students with disabilities and English 
                        learners, at rates similar to traditional 
                        public schools;
                  ``(E) the State entity will promote quality 
                authorizing, such as through providing technical 
                assistance and supporting all authorized public 
                chartering agencies in the State to improve the 
                oversight of their charter schools, including by--
                          ``(i) assessing annual performance data of 
                        the schools, including, as appropriate, 
                        graduation rates and student academic growth;
                          ``(ii) reviewing the schools' independent, 
                        annual audits of financial statements conducted 
                        in accordance with generally accepted 
                        accounting principles, and ensuring any such 
                        audits are publically reported; and
                          ``(iii) holding charter schools accountable 
                        to the academic, financial, and operational 
                        quality controls agreed to between the charter 
                        school and the authorized public chartering 
                        agency involved, such as through renewal, non-
                        renewal, or revocation of the school's charter;
                  ``(F) the State entity will work to ensure that 
                charter schools are included with the traditional 
                public schools in decision-making about the public 
                school system in the State; and
                  ``(G) the State entity will ensure that each charter 
                school in the State make publicly available, consistent 
                with the dissemination requirements of the annual State 
                report card, information to help parents make informed 
                decisions about the education options available to 
                their children, including information on the 
                educational program, student support services, and 
                annual performance and enrollment data for the groups 
                of students described in section 1111(b)(2)(C)(v)(II).
          ``(3) Requests for waivers.--A request and justification for 
        waivers of any Federal statutory or regulatory provisions that 
        the State entity believes are necessary for the successful 
        operation of the charter schools that will receive funds under 
        the State entity's program under this section, and a 
        description of any State or local rules, generally applicable 
        to public schools, that will be waived, or otherwise not apply 
        to such schools or, in the case of a State entity defined in 
        subsection (i)(4), a description of how the State entity will 
        work with the State to request necessary waivers where 
        applicable.
  ``(f) Selection Criteria; Priority.--
          ``(1) Selection criteria.--The Secretary shall award grants 
        to State entities under this section on the basis of the 
        quality of the applications submitted under subsection (e), 
        after taking into consideration--
                  ``(A) the degree of flexibility afforded by the 
                State's public charter school law and how the State 
                entity will work to maximize the flexibility provided 
                to charter schools under the law;
                  ``(B) the ambitiousness of the State entity's 
                objectives for the quality charter school program 
                carried out under this section;
                  ``(C) the quality of the strategy for assessing 
                achievement of those objectives;
                  ``(D) the likelihood that the eligible applicants 
                receiving subgrants under the program will meet those 
                objectives and improve educational results for 
                students;
                  ``(E) the State entity's plan to--
                          ``(i) adequately monitor the eligible 
                        applicants receiving subgrants under the State 
                        entity's program;
                          ``(ii) work with the authorized public 
                        chartering agencies involved to avoid 
                        duplication of work for the charter schools and 
                        authorized public chartering agencies; and
                          ``(iii) provide adequate technical assistance 
                        and support for--
                                  ``(I) the charter schools receiving 
                                funds under the State entity's program; 
                                and
                                  ``(II) quality authorizing efforts in 
                                the State; and
                  ``(F) the State entity's plan to solicit and consider 
                input from parents and other members of the community 
                on the implementation and operation of the charter 
                schools in the State.
          ``(2) Priority.--In awarding grants under this section, the 
        Secretary shall give priority to State entities to the extent 
        that they meet the following criteria:
                  ``(A) In the case of a State entity located in a 
                State that allows an entity other than a local 
                educational agency to be an authorized public 
                chartering agency, the State has a quality authorized 
                public chartering agency that is an entity other than a 
                local educational agency.
                  ``(B) The State entity is located in a State that 
                does not impose any limitation on the number or 
                percentage of charter schools that may exist or the 
                number or percentage of students that may attend 
                charter schools in the State.
                  ``(C) The State entity is located in a State that 
                ensures equitable financing, as compared to traditional 
                public schools, for charter schools and students in a 
                prompt manner.
                  ``(D) The State entity is located in a State that 
                uses charter schools and best practices from charter 
                schools to help improve struggling schools and local 
                educational agencies.
                  ``(E) The State entity partners with an organization 
                that has a demonstrated record of success in developing 
                management organizations to support the development of 
                charter schools in the State.
                  ``(F) The State entity supports charter schools that 
                support at-risk students through activities such as 
                dropout prevention or dropout recovery.
                  ``(G) The State entity authorizes all charter schools 
                in the State to serve as school food authorities.
                  ``(H) The State entity has taken steps to ensure that 
                all authorizing public chartering agencies implement 
                best practices for charter school authorizing.
  ``(g) Local Uses of Funds.--An eligible applicant receiving a 
subgrant under this section shall use such funds to carry out 
activities related to opening and preparing to operate a new charter 
school, a replicated, high-quality charter school model, or an 
expanded, high-quality charter school, such as--
          ``(1) preparing teachers and school leaders, including 
        through professional development;
          ``(2) acquiring equipment, educational materials, and 
        supplies; and
          ``(3) necessary renovations and minor facilities repairs 
        (excluding construction).
  ``(h) Reporting Requirements.--Each State entity receiving a grant 
under this section shall submit to the Secretary, at the end of the 
third year of the 5-year grant period and at the end of such grant 
period, a report on--
          ``(1) the number of students served by each subgrant awarded 
        under this section and, if applicable, how many new students 
        were served during each year of the subgrant period;
          ``(2) the progress the State entity made toward meeting the 
        priorities described in subsection (f)(2), as applicable;
          ``(3) how the State entity met the objectives of the quality 
        charter school program described in the State entity's 
        application under subsection (e);
          ``(4) how the State entity complied with, and ensured that 
        eligible applicants complied with, the assurances described in 
        the State entity's application;
          ``(5) how the State entity worked with authorized public 
        chartering agencies, including how the agencies worked with the 
        management company or leadership of the schools that received 
        subgrants under this section; and
          ``(6) the number of subgrants awarded under this section to 
        carry out each of the following:
                  ``(A) The opening of new charter schools.
                  ``(B) The opening of replicated, high-quality charter 
                school models.
                  ``(C) The opening of expanded, high-quality charter 
                schools.
  ``(i) State Entity Defined.--For purposes of this section, the term 
`State entity' means--
          ``(1) a State educational agency;
          ``(2) a State charter school board;
          ``(3) a Governor of a State; or
          ``(4) a charter school support organization.''.

SEC. 6. FACILITIES FINANCING ASSISTANCE.

  Section 5204 (20 U.S.C. 7221c) is amended to read as follows:

``SEC. 5204. FACILITIES FINANCING ASSISTANCE.

  ``(a) Grants to Eligible Entities.--
          ``(1) In general.--From the amount reserved under section 
        5202(b)(1), the Secretary shall not use less than 50 percent to 
        award grants to eligible entities that have the highest-quality 
        applications approved under subsection (d), after considering 
        the diversity of such applications, to demonstrate innovative 
        methods of assisting charter schools to address the cost of 
        acquiring, constructing, and renovating facilities by enhancing 
        the availability of loans or bond financing.
          ``(2) Eligible entity defined.--For purposes of this section, 
        the term `eligible entity' means--
                  ``(A) a public entity, such as a State or local 
                governmental entity;
                  ``(B) a private nonprofit entity; or
                  ``(C) a consortium of entities described in 
                subparagraphs (A) and (B).
  ``(b) Grantee Selection.--The Secretary shall evaluate each 
application submitted under subsection (d), and shall determine whether 
the application is sufficient to merit approval.
  ``(c) Grant Characteristics.--Grants under subsection (a) shall be of 
a sufficient size, scope, and quality so as to ensure an effective 
demonstration of an innovative means of enhancing credit for the 
financing of charter school acquisition, construction, or renovation.
  ``(d) Applications.--
          ``(1) In general.--To receive a grant under subsection (a), 
        an eligible entity shall submit to the Secretary an application 
        in such form as the Secretary may reasonably require.
          ``(2) Contents.--An application submitted under paragraph (1) 
        shall contain--
                  ``(A) a statement identifying the activities proposed 
                to be undertaken with funds received under subsection 
                (a), including how the eligible entity will determine 
                which charter schools will receive assistance, and how 
                much and what types of assistance charter schools will 
                receive;
                  ``(B) a description of the involvement of charter 
                schools in the application's development and the design 
                of the proposed activities;
                  ``(C) a description of the eligible entity's 
                expertise in capital market financing;
                  ``(D) a description of how the proposed activities 
                will leverage the maximum amount of private-sector 
                financing capital relative to the amount of public 
                funding used and otherwise enhance credit available to 
                charter schools, including how the eligible entity will 
                offer a combination of rates and terms more favorable 
                than the rates and terms that a charter school could 
                receive without assistance from the eligible entity 
                under this section;
                  ``(E) a description of how the eligible entity 
                possesses sufficient expertise in education to evaluate 
                the likelihood of success of a charter school program 
                for which facilities financing is sought; and
                  ``(F) in the case of an application submitted by a 
                State governmental entity, a description of the actions 
                that the entity has taken, or will take, to ensure that 
                charter schools within the State receive the funding 
                the charter schools need to have adequate facilities.
  ``(e) Charter School Objectives.--An eligible entity receiving a 
grant under this section shall use the funds deposited in the reserve 
account established under subsection (f) to assist one or more charter 
schools to access private sector capital to accomplish one or more of 
the following objectives:
          ``(1) The acquisition (by purchase, lease, donation, or 
        otherwise) of an interest (including an interest held by a 
        third party for the benefit of a charter school) in improved or 
        unimproved real property that is necessary to commence or 
        continue the operation of a charter school.
          ``(2) The construction of new facilities, or the renovation, 
        repair, or alteration of existing facilities, necessary to 
        commence or continue the operation of a charter school.
          ``(3) The predevelopment costs required to assess sites for 
        purposes of paragraph (1) or (2) and which are necessary to 
        commence or continue the operation of a charter school.
  ``(f) Reserve Account.--
          ``(1) Use of funds.--To assist charter schools to accomplish 
        the objectives described in subsection (e), an eligible entity 
        receiving a grant under subsection (a) shall, in accordance 
        with State and local law, directly or indirectly, alone or in 
        collaboration with others, deposit the funds received under 
        subsection (a) (other than funds used for administrative costs 
        in accordance with subsection (g)) in a reserve account 
        established and maintained by the eligible entity for this 
        purpose. Amounts deposited in such account shall be used by the 
        eligible entity for one or more of the following purposes:
                  ``(A) Guaranteeing, insuring, and reinsuring bonds, 
                notes, evidences of debt, loans, and interests therein, 
                the proceeds of which are used for an objective 
                described in subsection (e).
                  ``(B) Guaranteeing and insuring leases of personal 
                and real property for an objective described in 
                subsection (e).
                  ``(C) Facilitating financing by identifying potential 
                lending sources, encouraging private lending, and other 
                similar activities that directly promote lending to, or 
                for the benefit of, charter schools.
                  ``(D) Facilitating the issuance of bonds by charter 
                schools, or by other public entities for the benefit of 
                charter schools, by providing technical, 
                administrative, and other appropriate assistance 
                (including the recruitment of bond counsel, 
                underwriters, and potential investors and the 
                consolidation of multiple charter school projects 
                within a single bond issue).
          ``(2) Investment.--Funds received under this section and 
        deposited in the reserve account established under paragraph 
        (1) shall be invested in obligations issued or guaranteed by 
        the United States or a State, or in other similarly low-risk 
        securities.
          ``(3) Reinvestment of earnings.--Any earnings on funds 
        received under subsection (a) shall be deposited in the reserve 
        account established under paragraph (1) and used in accordance 
        with such paragraph.
  ``(g) Limitation on Administrative Costs.--An eligible entity may use 
not more than 2.5 percent of the funds received under subsection (a) 
for the administrative costs of carrying out its responsibilities under 
this section (excluding subsection (k)).
  ``(h) Audits and Reports.--
          ``(1) Financial record maintenance and audit.--The financial 
        records of each eligible entity receiving a grant under 
        subsection (a) shall be maintained in accordance with generally 
        accepted accounting principles and shall be subject to an 
        annual audit by an independent public accountant.
          ``(2) Reports.--
                  ``(A) Grantee annual reports.--Each eligible entity 
                receiving a grant under subsection (a) annually shall 
                submit to the Secretary a report of its operations and 
                activities under this section.
                  ``(B) Contents.--Each annual report submitted under 
                subparagraph (A) shall include--
                          ``(i) a copy of the most recent financial 
                        statements, and any accompanying opinion on 
                        such statements, prepared by the independent 
                        public accountant reviewing the financial 
                        records of the eligible entity;
                          ``(ii) a copy of any report made on an audit 
                        of the financial records of the eligible entity 
                        that was conducted under paragraph (1) during 
                        the reporting period;
                          ``(iii) an evaluation by the eligible entity 
                        of the effectiveness of its use of the Federal 
                        funds provided under subsection (a) in 
                        leveraging private funds;
                          ``(iv) a listing and description of the 
                        charter schools served during the reporting 
                        period, including the amount of funds used by 
                        each school, the type of project facilitated by 
                        the grant, and the type of assistance provided 
                        to the charter schools;
                          ``(v) a description of the activities carried 
                        out by the eligible entity to assist charter 
                        schools in meeting the objectives set forth in 
                        subsection (e); and
                          ``(vi) a description of the characteristics 
                        of lenders and other financial institutions 
                        participating in the activities undertaken by 
                        the eligible entity under this section 
                        (excluding subsection (k)) during the reporting 
                        period.
                  ``(C) Secretarial report.--The Secretary shall review 
                the reports submitted under subparagraph (A) and shall 
                provide a comprehensive annual report to Congress on 
                the activities conducted under this section (excluding 
                subsection (k)).
  ``(i) No Full Faith and Credit for Grantee Obligation.--No financial 
obligation of an eligible entity entered into pursuant to this section 
(such as an obligation under a guarantee, bond, note, evidence of debt, 
or loan) shall be an obligation of, or guaranteed in any respect by, 
the United States. The full faith and credit of the United States is 
not pledged to the payment of funds which may be required to be paid 
under any obligation made by an eligible entity pursuant to any 
provision of this section.
  ``(j) Recovery of Funds.--
          ``(1) In general.--The Secretary, in accordance with chapter 
        37 of title 31, United States Code, shall collect--
                  ``(A) all of the funds in a reserve account 
                established by an eligible entity under subsection 
                (f)(1) if the Secretary determines, not earlier than 2 
                years after the date on which the eligible entity first 
                received funds under this section (excluding subsection 
                (k)), that the eligible entity has failed to make 
                substantial progress in carrying out the purposes 
                described in subsection (f)(1); or
                  ``(B) all or a portion of the funds in a reserve 
                account established by an eligible entity under 
                subsection (f)(1) if the Secretary determines that the 
                eligible entity has permanently ceased to use all or a 
                portion of the funds in such account to accomplish any 
                purpose described in subsection (f)(1).
          ``(2) Exercise of authority.--The Secretary shall not 
        exercise the authority provided in paragraph (1) to collect 
        from any eligible entity any funds that are being properly used 
        to achieve one or more of the purposes described in subsection 
        (f)(1).
          ``(3)  Procedures.--The provisions of sections 451, 452, and 
        458 of the General Education Provisions Act 20 U.S.C. 124, 
        1234a, 1234g shall apply to the recovery of funds under 
        paragraph (1).
          ``(4) Construction.--This subsection shall not be construed 
        to impair or affect the authority of the Secretary to recover 
        funds under part D of the General Education Provisions Act (20 
        U.S.C. 1234 et seq.).
  ``(k) Per-pupil Facilities Aid Program.--
          ``(1) Definition of per-pupil facilities aid program.--In 
        this subsection, the term `per-pupil facilities aid program' 
        means a program in which a State makes payments, on a per-pupil 
        basis, to charter schools to provide the schools with 
        financing--
                  ``(A) that is dedicated solely for funding charter 
                school facilities; or
                  ``(B) a portion of which is dedicated for funding 
                charter school facilities.
          ``(2) Grants.--
                  ``(A) In general.--From the amount under section 
                5202(b)(1) remaining after the Secretary makes grants 
                under subsection (a), the Secretary shall make grants, 
                on a competitive basis, to States to pay for the 
                Federal share of the cost of establishing or enhancing, 
                and administering per-pupil facilities aid programs.
                  ``(B) Period.--The Secretary shall award grants under 
                this subsection for periods of not more than 5 years.
                  ``(C) Federal share.--The Federal share of the cost 
                described in subparagraph (A) for a per-pupil 
                facilities aid program shall be not more than--
                          ``(i) 90 percent of the cost, for the first 
                        fiscal year for which the program receives 
                        assistance under this subsection;
                          ``(ii) 80 percent in the second such year;
                          ``(iii) 60 percent in the third such year;
                          ``(iv) 40 percent in the fourth such year; 
                        and
                          ``(v) 20 percent in the fifth such year.
                  ``(D) State share.--A State receiving a grant under 
                this subsection may partner with 1 or more 
                organizations to provide up to 50 percent of the State 
                share of the cost of establishing or enhancing, and 
                administering the per-pupil facilities aid program.
                  ``(E) Multiple grants.--A State may receive more than 
                1 grant under this subsection, so long as the amount of 
                such funds provided to charter schools increases with 
                each successive grant.
          ``(3) Use of funds.--
                  ``(A) In general.--A State that receives a grant 
                under this subsection shall use the funds made 
                available through the grant to establish or enhance, 
                and administer, a per-pupil facilities aid program for 
                charter schools in the State of the applicant.
                  ``(B) Evaluations; technical assistance; 
                dissemination.--From the amount made available to a 
                State through a grant under this subsection for a 
                fiscal year, the State may reserve not more than 5 
                percent to carry out evaluations, to provide technical 
                assistance, and to disseminate information.
                  ``(C) Supplement, not supplant.--Funds made available 
                under this subsection shall be used to supplement, and 
                not supplant, State and local public funds expended to 
                provide per pupil facilities aid programs, operations 
                financing programs, or other programs, for charter 
                schools.
          ``(4) Requirements.--
                  ``(A) Voluntary participation.--No State may be 
                required to participate in a program carried out under 
                this subsection.
                  ``(B) State law.--
                          ``(i) In general.--Except as provided in 
                        clause (ii), to be eligible to receive a grant 
                        under this subsection, a State shall establish 
                        or enhance, and administer, a per-pupil 
                        facilities aid program for charter schools in 
                        the State, that--
                                  ``(I) is specified in State law; and
                                  ``(II) provides annual financing, on 
                                a per-pupil basis, for charter school 
                                facilities.
                          ``(ii) Special rule.--Notwithstanding clause 
                        (i), a State that is required under State law 
                        to provide its charter schools with access to 
                        adequate facility space, but which does not 
                        have a per-pupil facilities aid program for 
                        charter schools specified in State law, may be 
                        eligible to receive a grant under this 
                        subsection if the State agrees to use the funds 
                        to develop a per-pupil facilities aid program 
                        consistent with the requirements of this 
                        subsection.
          ``(5) Applications.--To be eligible to receive a grant under 
        this subsection, a State shall submit an application to the 
        Secretary at such time, in such manner, and containing such 
        information as the Secretary may require.''.

SEC. 7. NATIONAL ACTIVITIES.

  Section 5205 (20 U.S.C. 7221d) is amended to read as follows:

``SEC. 5205. NATIONAL ACTIVITIES.

  ``(a) In General.--From the amount reserved under section 5202(b)(2), 
the Secretary shall--
          ``(1) use not less than 75 percent of such funds to award 
        grants in accordance with subsection (b); and
          ``(2) use not more than 25 percent of such funds to--
                  ``(A) provide technical assistance to State entities 
                in awarding subgrants under section 5203, and eligible 
                entities and States receiving grants under section 
                5204;
                  ``(B) disseminate best practices; and
                  ``(C) evaluate the impact of the charter school 
                program, including the impact on student achievement, 
                carried out under this subpart.
  ``(b)  Grants.--
          ``(1) In general.--The Secretary shall make grants, on a 
        competitive basis, to eligible applicants for the purpose of 
        carrying out the activities described in section 5202(a)(1), 
        subparagraphs (A) through (C) of section 5203(a)(1), and 
        section 5203(g).
          ``(2) Terms and conditions.--Except as otherwise provided in 
        this subsection, grants awarded under this subsection shall 
        have the same terms and conditions as grants awarded to State 
        entities under section 5203.
          ``(3) Charter management organizations.--The Secretary 
        shall--
                  ``(A) use not less than 75 percent of the funds 
                described in subsection (a)(1) to make grants, on a 
                competitive basis, to eligible applicants described in 
                paragraph (4)(C); and
                  ``(B) notwithstanding paragraphs (1)(A) and (2) of 
                section 5203(f)--
                          ``(i) award grants to eligible applicants on 
                        the basis of the quality of the applications 
                        submitted under this subsection; and
                          ``(ii) in awarding grants to eligible 
                        applicants described in paragraph (4)(C), give 
                        priority to each such eligible applicant that--
                                  ``(I) demonstrates a high proportion 
                                of high-quality charter schools within 
                                the network of the eligible applicant;
                                  ``(II) demonstrates success in 
                                serving students who are educationally 
                                disadvantaged;
                                  ``(III) does not have a significant 
                                proportion of charter schools that have 
                                been closed, had their charter revoked 
                                for compliance issues, or had their 
                                affiliation with such eligible 
                                applicant revoked;
                                  ``(IV) has sufficient procedures in 
                                effect to ensure timely closure of low-
                                performing or financially-mismanaged 
                                charter schools and clear plans and 
                                procedures in effect for the students 
                                in such schools to attend other high-
                                quality schools; and
                                  ``(V) demonstrates success in working 
                                with schools identified for improvement 
                                by the State.
          ``(4) Eligible applicant defined.--For purposes of this 
        subsection, the term `eligible applicant' means an eligible 
        applicant (as defined in section 5210) that--
                  ``(A) desires to open a charter school in--
                          ``(i) a State that did not apply for a grant 
                        under section 5203; or
                          ``(ii) a State that did not receive a grant 
                        under section 5203; or
                  ``(B) is a charter management organization.
  ``(c) Contracts and Grants.--The Secretary may carry out any of the 
activities described in this section directly or through grants, 
contracts, or cooperative agreements.''.

SEC. 8. RECORDS TRANSFER.

  Section 5208 (20 U.S.C. 7221g) is amended--
          (1) by inserting ``as quickly as possible and'' before ``to 
        the extent practicable''; and
          (2) by striking ``section 602'' and inserting ``section 
        602(14)''.

SEC. 9. DEFINITIONS.

  Section 5210 (20 U.S.C. 7221i) is amended--
          (1) by amending paragraph (1) to read as follows:
          ``(1) Charter school.--The term `charter school' means a 
        public school that--
                  ``(A) in accordance with a specific State statute 
                authorizing the granting of charters to schools, is 
                exempt from significant State or local rules that 
                inhibit the flexible operation and management of public 
                schools, but not from any rules relating to the other 
                requirements of this paragraph;
                  ``(B) is created by a developer as a public school, 
                or is adapted by a developer from an existing public 
                school, and is operated under public supervision and 
                direction;
                  ``(C) operates in pursuit of a specific set of 
                educational objectives determined by the school's 
                developer and agreed to by the authorized public 
                chartering agency;
                  ``(D) provides a program of elementary or secondary 
                education, or both;
                  ``(E) is nonsectarian in its programs, admissions 
                policies, employment practices, and all other 
                operations, and is not affiliated with a sectarian 
                school or religious institution;
                  ``(F) does not charge tuition;
                  ``(G) complies with the Age Discrimination Act of 
                1975, title VI of the Civil Rights Act of 1964, title 
                IX of the Education Amendments of 1972, section 504 of 
                the Rehabilitation Act of 1973, part B of the 
                Individuals with Disabilities Education Act, the 
                Americans with Disabilities Act of 1990 (42 U.S.C. 
                12101 et seq.), and section 444 of the General 
                Education Provisions Act (20 U.S.C. 1232(g)) (commonly 
                known as the `Family Education Rights and Privacy Act 
                of 1974');
                  ``(H) is a school to which parents choose to send 
                their children, and admits students on the basis of a 
                lottery if more students apply for admission than can 
                be accommodated, except that in cases in which students 
                who are enrolled in a charter school affiliated (such 
                as by sharing a network) with another charter school, 
                those students may be automatically enrolled in the 
                next grade level at such other charter school, so long 
                as a lottery is used to fill seats created through 
                regular attrition in student enrollment;
                  ``(I) agrees to comply with the same Federal and 
                State audit requirements as do other elementary schools 
                and secondary schools in the State, unless such State 
                audit requirements are waived by the State;
                  ``(J) meets all applicable Federal, State, and local 
                health and safety requirements;
                  ``(K) operates in accordance with State law;
                  ``(L) has a written performance contract with the 
                authorized public chartering agency in the State that 
                includes a description of how student performance will 
                be measured in charter schools pursuant to State 
                assessments that are required of other schools and 
                pursuant to any other assessments mutually agreeable to 
                the authorized public chartering agency and the charter 
                school; and
                  ``(M) may serve prekindergarten or postsecondary 
                students.'';
          (2) by redesignating paragraphs (2) through (4) as paragraphs 
        (4) through (6), respectively;
          (3) by inserting after paragraph (1), the following:
          ``(2) Charter management organization.--The term `charter 
        management organization' means a not-for-profit organization 
        that manages a network of charter schools linked by centralized 
        support, operations, and oversight.
          ``(3) Charter school support organization.--The term `charter 
        school support organization' means a nonprofit, nongovernmental 
        entity that is not an authorized public chartering agency, 
        which provides on a statewide basis--
                  ``(A) assistance to developers during the planning, 
                program design, and initial implementation of a charter 
                school; and
                  ``(B) technical assistance to charter schools to 
                operate such schools.'';
          (4) in paragraph (5)(B), as so redesignated, by striking 
        ``under section 5203(d)(3)''; and
          (5) by adding at the end the following:
          ``(7) Expanded, high-quality charter school.--The term 
        `expanded, high-quality charter school' means a high-quality 
        charter school that has either significantly increased its 
        enrollment or added one or more grades to its school.
          ``(8) High-quality charter school.--The term `high-quality 
        charter school' means a charter school that--
                  ``(A) shows evidence of strong academic results, 
                which may include strong academic growth as determined 
                by a State;
                  ``(B) has no significant issues in the areas of 
                student safety, operational and financial management, 
                or statutory or regulatory compliance;
                  ``(C) has demonstrated success in significantly 
                increasing student academic achievement, including 
                graduation rates where applicable, consistent with the 
                requirements under title I, for all students served by 
                the charter school; and
                  ``(D) has demonstrated success in increasing student 
                academic achievement, including graduation rates where 
                applicable, for the groups of students described in 
                section 1111(b)(2)(C)(v)(II), except that such 
                demonstration is not required in a case in which the 
                number of students in a group is insufficient to yield 
                statistically reliable information or the results would 
                reveal personally identifiable information about an 
                individual student.
          ``(9) Replicated, high-quality charter school model.--The 
        term `replicated, high-quality charter school model' means a 
        high-quality charter school that has opened a new campus under 
        an existing charter or an additional charter if required by 
        State law.''.

SEC. 10. AUTHORIZATION OF APPROPRIATIONS.

  Section 5211 (20 U.S.C. 7221j) is amended to read as follows:

``SEC. 5211. AUTHORIZATION OF APPROPRIATIONS.

  ``There are authorized to be appropriated to carry out this subpart 
$300,000,000 for fiscal year 2015 and each of the 5 succeeding fiscal 
years.''.

SEC. 11. CONFORMING AMENDMENTS.

  (a) Repeal.--Subpart 2 of part B of title V (20 U.S.C. 7223 et seq.) 
is repealed.
  (b) Table of Contents.--The table of contents in section 2 is 
amended--
          (1) by striking the item relating to subpart 1 of part B of 
        title V and inserting the following:

                 ``Subpart 1--Charter School Program'';

          (2) by striking the item relating to section 5203 and 
        inserting the following:

``Sec. 5203. Grants to support high-quality charter schools.'';

          (3) by striking the item relating to section 5204 and 
        inserting the following:

``Sec. 5204. Facilities financing assistance.''; and

          (4) by striking the items relating to subpart 2 of part B of 
        title V.

 H.R. 10, THE SUCCESS AND OPPORTUNITY THROUGH QUALITY CHARTER SCHOOLS 
                                  ACT


                            COMMITTEE REPORT


                                Purpose

    H.R. 10, the Success and Opportunity through Quality 
Charter Schools Act, reauthorizes and modernizes the Charter 
School Program under the Elementary and Secondary Education 
Act. The bill increases the number of high-quality charter 
schools available to students and families; ensures charter 
schools share their best practices with all public schools; 
improves charter school access and services for all students, 
including students with disabilities and English learners; and 
emphasizes quality and accountability in charter school 
authorizing.

                            Committee Action

    H.R. 10 is the latest effort by the committee to 
reauthorize and reform the Charter School Program under the 
Elementary and Secondary Education Act. It builds on the 
committee's legislation proposed in previous congresses, as 
well as lessons learned from hearings and other activity in the 
113th Congress.

                             111TH CONGRESS

Hearings

    On June 4, 2009, the Committee on Education and Labor held 
a hearing entitled ``Building on What Works at Charter 
Schools.'' The purpose of the hearing was to learn how 
representatives from the U.S. Department of Education, states, 
charter school authorizers, and charter school providers 
produce high-quality charter schools and how those programs can 
be replicated and brought to scale. Testifying before the 
committee were The Honorable Barbara O'Brien, Lieutenant 
Governor, State of Colorado, Denver, CO; Mr. James Shelton, 
Assistant Deputy Secretary for Innovation and Improvement, U.S. 
Department of Education, Washington, DC; Mr. Steve Barr, 
Founder and Chairman, Green Dot Public Schools, Los Angeles, 
CA; Dr. John King, Managing Director, Excellence and 
Preparatory Network of Uncommon Schools, New York, NY; Mr. 
David Dunn, Executive Director, Texas Charter Schools 
Association, Austin, TX; and Mr. James Goenner, Executive 
Director, The Center for Charter Schools, Central Michigan 
University, Mount Pleasant, MI.
    On February 24, 2010, the Committee on Education and Labor 
held a hearing on quality charter schools and H.R. 4330, the 
All Students Achieving through Reform Act. The purpose of the 
hearing was to discuss how charter school providers maintain 
quality in charter schools, what student populations charter 
schools serve, and the importance of keeping charter schools 
autonomous. The hearing focused on H.R. 4330, which created a 
new program under the Charter School Program to provide funding 
for the expansion and replication of charter schools. 
Testifying before the committee were Ms. Eva Moskowitz, 
Founder, Success Charter Network, New York, NY; Ms. Robin J. 
Lake, Associate Director, Center on Reinventing Public 
Education, Seattle, WA; Dr. Thomas Hehir, Professor of 
Practice, Harvard Graduate School of Education, Cambridge, MA; 
Mr. Greg Richmond, President and CEO, National Association of 
Charter School Authorizers, Chicago, IL; Ms. Eileen Ahern, 
Director, National Association of State Directors of Special 
Education, Alexandria, VA; and Dr. Caprice Young, President and 
CEO, KC Distance Learning, Portland, OR.

Legislative action

    In H.R. 3288, the Consolidated Appropriations Act of 2010, 
the Committee on Appropriations provided $256 million for the 
Charter School Program and reserved $50 million of those funds 
to support the expansion and replication of existing high-
quality charter schools. H.R. 3288 was signed into law on 
December 16, 2009.

                             112TH CONGRESS

Hearings

    On April 7, 2011, the Committee on Education and the 
Workforce held a hearing entitled ``Education Reforms: 
Promoting Flexibility and Innovation.'' The purpose of the 
hearing was to discuss the appropriate federal role in K-12 
education and explore the work of state and local education 
leaders who advocate for innovative approaches to education 
reform and greater state and local flexibility. Testifying 
before the committee were Dr. Janet Barresi, Oklahoma State 
Superintendent of Public Instruction, Oklahoma City, OK; Dr. 
Gary Amoroso, Superintendent, Lakeville Area Public Schools, 
Lakeville, MN; Mr. Yohance Maqubela, Chief Operating Officer, 
Howard University Middle School of Mathematics and Science, 
Washington, DC; and Dr. Terry Grier, Superintendent, Houston 
Independent School District, Houston, TX.
    On June 1, 2011, the Committee on Education and the 
Workforce Subcommittee on Early Childhood, Elementary, and 
Secondary Education held a hearing entitled ``Education 
Reforms: Exploring the Vital Role of Charter Schools.'' The 
purpose of the hearing was to examine the contributions of 
charter schools to state and local efforts to improve public 
education and the importance of empowering parents to choose 
the best school environment for their children. Testifying 
before the subcommittee were Ms. DeAnna Rowe, Executive 
Director, Arizona State Board for Charter Schools, Phoenix, AZ; 
Ms. Debbie Beyer, Executive Director, Literacy First Charter 
Schools, El Cajon, CA; Dr. Gary Miron, College of Education, 
Western Michigan University, Kalamazoo, MI; and Dr. Beth 
Purvis, Executive Director, Chicago International Charter 
School, Chicago, IL.

Legislative action

    H.R. 1473, the Department of Defense and Full-Year 
Continuing Appropriations Act of 2011, included $256 million 
for the Charter School Program and reserved $50 million to 
support the expansion and replication of existing high-quality 
charter schools. H.R. 1473 was signed into law on April 15, 
2011.
    On June 16, 2011, Rep. Duncan Hunter (R-CA) and Chairman 
John Kline (R-MN) introduced H.R. 2218, the Empowering Parents 
through Quality Charter Schools Act. This bill reauthorized and 
improved the existing charter school provisions under the 
Elementary and Secondary Education Act. H.R. 2218 was 
cosponsored by Rep. George Miller (D-CA), Rep. Tom Petri (R-
WI), Rep. Howard P. ``Buck'' McKeon (R-CA), Rep. Phil Roe (R-
TN), Rep. Trey Gowdy (R-SC), Rep. Larry Bucshon (R-IN), Rep. 
Tim Walberg (R-MI), Rep. Scott DesJarlais (R-TN), Rep. Mike 
Kelly (R-PA), Rep. Jared Polis (D-CO), Rep. Todd Rokita (R-IN), 
and Rep. Ander Crenshaw (R-FL).
    On June 22, 2011, the Committee on Education and the 
Workforce considered H.R. 2218 in legislative session and 
reported it favorably, as amended, to the House of 
Representatives by a bipartisan vote of 34-5. The committee 
considered and adopted one amendment to the bill, an Amendment 
in the Nature of a Substitute, offered by Rep. Duncan Hunter 
(R-CA).
    The Committee received letters of support for H.R. 2218 
from the following organizations: The U.S. Chamber of Commerce, 
Business Roundtable, Chiefs for Change, Knowledge Is Power 
Program (KIPP) Foundation, Council for Exceptional Children, 
Charter School Lenders Coalition, Democrats for Education 
Reform, National Association for Charter School Authorizers, 
National Alliance for Public Charter Schools, National 
Association of State Directors of Special Education, New 
Schools Venture Fund, the California Charter Schools 
Association, and the Texas Charter Schools Association.

                             113TH CONGRESS

Hearings

    On March 12, 2014, the Committee on Education and the 
Workforce held a hearing entitled ``Raising the Bar: The Role 
of Charter Schools in K-12 Education'' to highlight the role 
charter schools play in improving K-12 education and discuss 
innovative public school choice models from across the country. 
Testifying before the committee were Dr. Deborah McGriff, Chair 
of the Board, National Alliance for Public Charter Schools, 
Milwaukee, WI; Mrs. Lisa Graham Keegan, Chair of the Board, 
National Association of Charter School Authorizers, Peoria, AZ; 
Mr. David Linzey, Executive Director, Clayton Valley Charter 
High School, Concord, CA; Ms. Alyssa Whitehead-Bust, Chief of 
Innovation and Reform, Denver Public Schools, Denver, CO; and 
Mr. Alan Rosskamm, Chief Executive Officer, Breakthrough 
Schools, Cleveland, OH.

Legislative action

    On July 19, 2013, the House of Representatives passed H.R. 
5, the Student Success Act, by a vote of 221-207. The House-
passage of H.R. 5 followed consideration of the bill by the 
Committee on Education and the Workforce on June 19, 2013, in 
legislative session and reported it favorably, as amended, to 
the House of Representatives by a vote of 23-16. H.R. 5 was 
introduced by Chairman John Kline (R-MN) on June 6, 2013, and 
reauthorized the Elementary and Secondary Education Act in its 
entirety, including the Charter School Program. The charter 
school provisions in the bill differed slightly from H.R. 2218 
(112th Congress), notably by adding charter support 
organizations as entities eligible for state grants. An 
amendment in the nature of a substitute to H.R. 5 offered by 
the committee's senior democratic, Ranking Member George Miller 
(D-CA), also included reauthorization of the Charter School 
Program.
    On April 1, 2014, Chairman Kline and Ranking Member Miller 
introduced H.R. 10, the Success and Opportunity through Quality 
Charter Schools Act. This bill reauthorizes and improves the 
existing charter school provisions under the Elementary and 
Secondary Education Act. H.R. 10 is cosponsored by Rep. Susan 
Brooks (R-IN), Rep. Larry Bucshon (R-IN), Rep. Bradley Byrne 
(R-AL), Rep. Scott DesJarlais (R-TN), Rep. Sean Duffy (R-WI), 
Rep. Blake Farenthold (R-TX), Rep. Brett Guthrie (R-KY), Rep. 
Joseph Heck (R-NV), Rep. Ruben Hinojosa (D-TX), Rep. Richard 
Hudson (R-NC), Rep. Duncan Hunter (R-CA), Rep. Luke Messer (R-
IN), Rep. Scott Peters (D-CA), Rep. Tom Petri (R-WI), Rep. 
Jared Polis (D-CO), Rep. Phil Roe (R-TN), Rep. Todd Rokita (R-
IN), Rep. Tim Walberg (R-MI), Rep. Daniel Webster (R-FL), Rep. 
Joe Wilson (R-SC) and Rep. Steve Womack (R-AR).
    On April 8, 2014, the Committee on Education and the 
Workforce considered H.R. 10, the Success and Opportunity 
through Quality Charter Schools Act, in legislative session and 
reported the bill favorably, as amended, to the House of 
Representatives by a vote of 36-3.
    The committee considered and adopted the following 
amendment to H.R. 10:
    Rep. Luke Messer (R-IN) offered an amendment in the nature 
of a substitute. It passed by voice. This amendment:
           Makes technical edits, such as clarifying 
        the secretary ``provides'' technical assistance, 
        permitting local uses of funds to include acquiring 
        equipment and supplies, and clarifying the admission by 
        feeder pattern language.
           Adds a phrase to ensure only schools meeting 
        the definition of a ``charter school'' are receiving 
        subgrants under this program.
           Clarifies the definition of ``replicable, 
        high-quality charter school'' to ensure schools 
        replicating a high quality model can do it under a new 
        charter if the state requires each school operate under 
        a separate charter.
           Adjusts the funding allocation by moving 2.5 
        percent of the funding for facilities aid to the state 
        grants. This provides more money to the states opening 
        new schools, and still leaves a significant share of 
        funding for facilities aid.
           Clarifies computer science is a part of 
        technology within science, technology, engineering, and 
        math activities. Also provides states can share best 
        practices on core academic subjects.
           Adds a new requirement for states to assist 
        students to find new schools in the event their charter 
        school closes.
           Clarifies a weighted lottery may not be used 
        to create a school to serve a select population.
    The Committee received letters of support for H.R. 10 from 
the following organizations: The Arc, Autism National 
Committee, Breakthrough Schools, U.S. Chamber of Commerce, 
Charter Management Organizations Coalition, Chiefs for Change, 
Consortium for Citizens with Disabilities, Council for 
Exceptional Children, Council of Chief State School Officers, 
Council of Parent Attorneys and Advocates, Inc., Education 
Trust, National Association of Charter School Authorizers, 
National Alliance for Public Charter Schools, National 
Association of State Directors of Special Education, Inc., 
National Center for Learning Disabilities, the National Center 
for Special Education in Charter Schools, Foundation for 
Excellence in Education, National Council of La Raza, and the 
Business Roundtable.


                                Summary

    H.R. 10, the Success and Opportunity through Quality 
Charter Schools Act, streamlines and modernizes the existing 
charter school programs under the Elementary and Secondary 
Education Act. In current law, two charter school programs 
exist:
           The Charter School Program supports grants 
        for charter school developers to open new charter 
        schools. The program also provides funds to disseminate 
        best practices and provide state facilities aid to 
        charter schools. The program was last authorized at 
        $300 million in FY 2002 and such sums as necessary for 
        FY 2003 through 2007.
           The Charter School Credit Enhancement 
        Program assists charter schools in accessing better 
        credit terms for funding to acquire and renovate 
        facilities used to operate a charter school. The 
        program was last authorized at $150 million in FY 2002 
        and such sums as necessary for FY 2003 through 2007.
    The Success and Opportunity through Quality Charter Schools 
Act consolidates the two programs into one, refocuses the new 
program to promote high-quality charter schools at the state 
and local levels, and allows states to use federal funds to 
start new charter schools as well as expand and replicate 
existing high-quality charter schools. Additionally, the bill 
authorizes a Charter Management Organization grant program to 
support the organization's success in replicating and expanding 
high-quality charter schools nationwide.
    The new Charter School Program will consist of three parts:
           Grants to support high-quality charter 
        schools will be awarded to a State Educational Agency, 
        the State Charter School Board, the Governor, or a 
        Charter School Support Organization. The grants will 
        support the expansion and replication of high-quality 
        charter schools, along with new, innovative charter 
        school models by state entities committed to charter 
        school quality, which increases opportunities for all 
        students to benefit from quality charter schools. 
        Additionally, each state will use a portion of the 
        funding to support quality initiatives aimed toward 
        improved charter school authorizing.
           Facilities Aid will be awarded to continue 
        credit enhancement activities and support state 
        facilities aid for charter schools.
           National Activities will allow the Secretary 
        of Education to operate a grant competition for charter 
        schools in states that did not win or compete for a 
        state grant and a grant competition for high quality 
        charter management organizations (CMO). This section 
        also requires the secretary to offer technical 
        assistance to eligible grantees applying for the grant, 
        and to grantees implementing the grant. The secretary 
        will also be allowed to disseminate best practices to 
        ensure all public schools may benefit from charter 
        schools' success. Finally, the secretary will conduct 
        an evaluation of the effects of the legislation on 
        charter schools, including on student achievement.
    The Success and Opportunity through Quality Charter Schools 
Act authorizes the Charter School Program at $300 million for 
FY 2015 through FY 2020. The bill clarifies state-determined 
weighted lotteries are permitted under this program and 
clarifies students in affiliated charter schools can attend the 
next immediate grade in that network's school.
    Furthermore, the bill makes technical corrections to other 
provisions in the Charter School Program, including modifying 
the definition of a ``charter school'' to clarify a charter 
school can serve early childhood students as well as 
postsecondary students. Finally, the legislation adds five new 
definitions to the law: ``charter management organization,'' 
``charter support organization,'' ``high-quality charter 
school,'' ``expansion of a high-quality charter school,'' and 
``replicable, high-quality charter school model.''

                            Committee Views


                               BACKGROUND

    A public charter school is a publicly-funded elementary or 
secondary school operated according to the terms of a charter 
or contract granted by a public chartering agency. The terms of 
a charter typically provide the charter school operator with 
increased autonomy in how to operate the school in exchange for 
greater accountability for results or student outcomes. 
Charters are usually granted for a limited time period, 
typically ranging from fewer than five years to as many as 15 
years. In order to retain or renew its charter, a school must 
adhere to the accountability requirements written into its 
charter and attract enough students to continue functioning as 
a viable school.
    Charter schools are a state education reform initiative 
that began in Minnesota in 1991. The Improving America's 
Schools Act of 1994 included support for starting charter 
schools. The Credit Enhancement Program, which began in 2001 
through the appropriations process, provides grants to eligible 
entities to help charter schools leverage other funds through 
credit enhancement initiatives to acquire, construct, renovate, 
or lease academic facilities.
    The first charter school opened in 1992. Today, 6,400 
charter schools in 42 states and the District of Columbia serve 
more than 2.5 million students. Forty-two states have enacted 
charter school laws, giving parents and students an education 
alternative to traditional public schools. However, this growth 
is not enough to meet the demand. An estimated 920,000 students 
are on waitlists to enter charter schools. The demand is 
understandable. Since 2010, 15 of 16 ``gold standard'' research 
studies conducted on public charter school student achievement 
have found public charter school students are outperforming 
their traditional school peers. In 2013, the Center for 
Research on Educational Outcomes released a study that found a 
charter school education had a positive impact for many 
subgroups, including Black students, students in poverty, 
English learners, and students in special education. For 
English learner students who are Hispanic, attending a charter 
school resulted in 50 additional days of learning in reading 
and 43 additional days of learning in math. Yet, charter 
schools continue to face challenges in serving certain 
populations of students, in particular students with 
disabilities--including those with lower incidence 
disabilities--and English learners.

                          LEGISLATIVE CHANGES

    H.R. 10, the Success and Opportunity through Quality 
Charter Schools Act, improves access for traditionally 
underserved populations, supports the creation, replication and 
expansion of high-quality charter schools, and strengthens 
accountability for developers who receive federal funding to 
open, replicate, or expand charter schools. Consolidating the 
two charter school provisions into one program better focuses 
support for all elements important to creating high-quality 
charter schools.
    The charter school movement has seen robust growth over the 
past decade. There are now many high-quality charter schools 
eligible to receive federal and state support to expand and 
replicate their successes. The Committee on Appropriations 
supported this effort through a reservation within the Charter 
School Program appropriation, and the Committee on Education 
and the Workforce believes it is important to update the 
authorizing legislation to ensure states support these schools. 
The Success and Opportunity through Quality Charter Schools Act 
adds an expansion and replication use of funds under each State 
Quality Charter School Grant to support the start-up of new, 
innovative charter school models, as well as the expansion and 
replication of high-quality charter schools. The committee 
believes successful replication and expansion of high-quality 
charter schools are dependent on state support and community 
buy-in. This belief is reflected in the allowance of state 
entity subgranting for these purposes and a decreased reliance 
on funds awarded directly to developers from the secretary of 
education.
    Charter schools receiving funds under this program must 
admit their students through a lottery system if the demand for 
attendance exceeds the available slots in the schools. It is 
important to assist these schools in reaching all students who 
may benefit from the opening or expansion of charter schools. 
However, the focus must be on increasing the number of quality 
education options, not just increasing the number of charter 
schools available. In order to expand access to quality public 
charter schools, the legislation includes provisions to help 
state grantees reach out to charter school developers and 
school leaders to recruit traditionally underserved students, 
including students with disabilities and English learners; to 
promote inclusion and retention; and to meet the needs of those 
students. Further, the state grantees must award grants to 
urban, suburban, and rural areas (including Indian 
reservations) to ensure quality charter school options reach as 
many students as possible, including American Indian and Alaska 
Native students.
    The Success and Opportunity through Quality Charter Schools 
Act supports charter schools in serving students with 
disabilities, including students with lower incidence 
disabilities, English learners, and other traditionally 
underserved students. The legislation recognizes charter 
schools need support in recruiting, enrolling, and retaining 
these students and includes provisions to help charter schools 
address those challenges. The committee believes the technical 
assistance required of grantees will help charter schools with 
these goals. H.R. 10 will allow weighted lotteries that help 
ensure educationally disadvantaged students have a better 
chance to attend a charter school. A weighted lottery is a 
mechanism used to create diverse student populations. H.R. 10 
permits the weighting of specific student attributes to give a 
statistical advantage to disadvantaged students, or a subset of 
those students. The lottery should remain a fair process to 
ensure all students have the opportunity to attend these 
sought-after schools. In addition, this provision clarifies 
charter schools in receipt of Charter School Program funds may 
use a weighted lottery for educationally disadvantaged 
students, provided the weighted lottery is not prohibited by 
state law and is not used to create a school made exclusively 
of one student subgroup.
    Ensuring grantees award funds for the creation, 
replication, and expansion of high-quality charter school 
remains paramount. When awarding subgrants, state entities 
should ensure charter school developers open a school that 
meets the intent and requirements of the law, and in 
particular, the definition of a charter school. When 
subgrantees are applying to expand or replicate already 
existing charter school models, the state entity must ensure 
the models meet the definition of high-quality charter school. 
In particular, the state entity should ensure the charter 
school is exempt from significant state and local requirements 
that inhibit the operation of a school and has a high degree of 
autonomy over budget and all operations.
    When recruiting students, charter schools should ensure 
parents have the information they need to make the best 
decisions possible for their children. This includes 
encouraging parents to examine the academic success of the 
school, the teaching philosophy of the school, and the ability 
of the school to meet the education needs of any student 
admitted to the school. The legislation encourages state 
entities to monitor charter schools to ensure compliance with 
all federal civil rights statutes and there are no barriers to 
enrollment that could prevent the enrollment of students based 
on socioeconomic status, language proficiency, academic 
performance, disability, or parental involvement. The 
legislation supports charter schools that promote an inclusive 
environment. High-quality charter schools, as defined in the 
legislation, raise the achievement of all students, including 
students with disabilities, English learners, and other 
traditionally underserved populations.
    In modernizing the Charter School Program, H.R. 10 includes 
a new provision that reserves seven percent of each state grant 
to support initiatives to improve charter school authorizing. 
This initiative will help charter school authorizers identify 
key indicators of quality, including how to ensure the school 
and the authorizer clearly articulate the goals and 
expectations of each party. It will also help charter schools 
meet their obligations under existing laws and this Act. The 
funds will also be used to increase the number of high-quality 
charter schools available to students by opening new charter 
schools and by helping charter schools recruit, enroll, and 
meet the needs of students with disabilities, including 
students with low-incidence disabilities, and English learners.
    The bill requires eligible applicants to describe the 
quality controls agreed to in the authorizing contract and the 
terms of contracts with other organizations. In their 
applications, charter schools must describe how their 
authorizers evaluate the success of the schools primarily on 
the academic achievement of all of their students, as well as 
through other performance measures determined by state law, the 
authorizer, and the school, as outlined in a legally binding 
performance contract.
    The legislation also requires charter schools to have 
transparent contractual relationships with management 
organizations. As stipulated in the U.S. Department of 
Education non-regulatory guidance for the current Charter 
School Program, charter schools receiving grants under this 
program should avoid conflicts of interest. In promoting 
quality authorizing practices, state grantees should support 
authorizers that make annual, independent financial audits 
publicly available and easily accessible, such as through 
posting on the school or authorizer website. In addition, state 
grantees must describe how they will provide oversight of 
authorizing activity in their application.
    The committee intends the requirement to describe such a 
system will not inhibit participation or competition by states 
with legal, constitutional, or structural barriers that 
constrain the state's authority over the authorized public 
chartering agency or the type or number of authorized public 
chartering agencies. Further, as the purpose of the Success and 
Opportunity through Quality Charter Schools Act is to expand 
the number of high-quality charter schools available to 
students across the nation, it is the committee's intent that 
oversight of authorizing activity must not abolish all public 
chartering agencies or all authorizing activity in any given 
geographic area, as this would prevent the expansion of high-
quality charter schools and would be contrary to the purpose of 
this Act. The committee believes it is important authorizers 
and charter schools have as much flexibility in complying with 
these provisions as possible to ensure charter schools meet the 
expectations of their respective authorizers and still operate 
in an autonomous manner to meet the goals of the school.
    The Success and Opportunity through Quality Charter Schools 
Act also allows new eligible entities to compete for funding 
under State Quality Charter School Grants and provides 
increased flexibility in the operation of the state grant 
competition for start-up of charter schools. The bill expands 
the eligible entities for state grants to include state charter 
school boards, governors, and charter school support 
organizations, in addition to the State Educational Agency 
(SEA) allowed under current law. This expansion of eligible 
grantees will ensure charter schools have an opportunity to 
open and expand with the support of a grantee that believes in 
the benefit of charter schools and offers the greatest 
assistance to those schools that win subgrants. To ensure 
grantees are able to meet the requirements of the program, the 
legislation allows states to partner with an entity that can 
help it operate a quality program that adequately supports the 
thoughtful growth of charter schools in the state. While there 
may be multiple eligible grantees for each state, the committee 
supports limiting each state to one grant to avoid duplication 
in the state, ensure funds are used to build a cohesive 
statewide network of support and ensure funds reach as many 
states, and therefore schools, as possible across the nation.
    The new eligible grantees are also required to collaborate 
with the SEA, where appropriate. While this provision does not 
give the SEA any authority over the grantee or program the 
grantee is running, it will ensure the SEA and charter school 
operators are working together in a cohesive, statewide system, 
rather than creating parallel systems. The SEA may help 
distribute grants to schools, help the entity run the grant 
competition, or provide guidance to support the peer review 
requirement in the law. In addition, should a charter school 
support organization administer the grant, nothing in this bill 
shall be interpreted to grant the charter school support 
organization any authority over authorized public chartering 
agencies.
    H.R. 10 includes a clear listing of assurances, priorities, 
and selection criteria for awarding charter school grants, 
which will improve charter schools, improve access to high-
quality charter schools, and expand the availability of high-
quality charter schools as an integral component of state 
public school systems. For example, grantees will ensure 
charter schools actively participate in decisions about the 
public school system, providing charter schools, as public 
schools, the same voice in decisions affecting the schools and 
their students as traditional public schools. The committee 
believes this important change is an opportunity to share best 
practices between all public schools and ensure all schools 
have an equal voice in the public school system. An assurance 
each charter school has a high level of autonomy, particularly 
over budgets and all operations (including personnel) will also 
ensure the schools can be innovative in responding to the needs 
of the community. Additionally, the bill includes a selection 
priority for state entities in states that maximize the 
flexibility of their charter school statute to foster 
innovation and support quality charter schools.
    The legislation incentivizes states to support more high-
quality charter schools that meet the needs of the local 
community. Provisions supporting the elimination of caps on 
students or schools will help get funds to states that can open 
new schools. The bill includes a priority for those states that 
have more than one statewide authorizer, or an appeals process 
if the only local authorizer is the Local Educational Agency. 
The committee believes this will ensure charter schools are not 
held hostage to the traditional public school system that sees 
charter schools as competition, rather than an enhancement to 
the public school system. The committee believes these 
provisions will help charter schools better serve students, 
including students with disabilities and English learners.
    H.R. 10 removes language in current law that impedes the 
effective use of subgrants for start-up costs, and instead 
permits funds to be used for appropriate activity related to 
opening and preparing to operate a new charter school. The 
committee believes this language will ensure charter schools 
can use funds for any non-sustained costs, including costs not 
permitted under current law. For example, transportation 
outlays such as a school bus, initial personnel costs, and 
building renovations and improvements to meet code would be 
permitted under this language. H.R. 10 also requires all 
subgrantees submit planned expenditures for the life of the 
grant and demonstrate the financial sustainability of each 
charter school receiving program funds following the grant 
period.
    The committee believes reporting requirements are an 
important tool for evaluating the success of grantees in 
fulfilling the purpose of the program. H.R. 10 requires 
grantees to report to the secretary of education at the end of 
the third year of the five-year grant period. The information 
submitted to the secretary on the number of students served 
during each year of the grant period should be reported by 
subgrant, but is not intended to create any increased burdens 
for the schools participating in the program.
    The legislation consolidates the existing credit 
enhancement program and the state facilities aid program to 
clarify the law. The requirement to reserve 12.5 percent of the 
total appropriated funds ensures there are funds sufficient to 
award more than one grant each year under the credit 
enhancement program. This program helps charter schools access 
credit to obtain or renovate facilities to open the school. The 
legislative changes made to this provision increase the 
administrative reservation to 2.5 percent of each grant to 
ensure the grantee can reach out to, serve, and properly 
monitor charter schools assisted under the grant. The bill also 
increases the flexibility in awarding grants under the credit 
enhancement program to ensure the best grantees are receiving 
federal funds.
    The Success and Opportunity through Quality Charter Schools 
Act updates the national activities provisions to allow the 
Secretary of Education to run a competition for charter schools 
wanting to open in states that did not win or compete for a 
state grant. Additionally, the legislation authorizes the 
secretary to run a competition for CMOs, targeted to those 
having a proven record of success increasing academic 
achievement for students, operating and managing a network of 
schools, and partnering with states and districts to turn 
around chronically low-performing schools, not simply open new 
schools. These competitions will ensure students are not left 
behind in states that have not demonstrated the leadership to 
support charter schools. Successful CMOs can thoughtfully 
replicate and expand high-quality charter school models, 
approved by individual states in accordance with state laws.
    It is the committee's expectation the secretary will assess 
the quality of applicants in the same manner as in the state 
competition and will consider their demonstrated track record 
of opening high quality schools serving a high percentage of 
economically disadvantaged students, and the application 
requirements will reflect this purpose of the program. The 
secretary will also be required to offer technical assistance 
to maximize the impact of the funds. The secretary will 
disseminate best practices to help all public schools benefit 
from the success of charter schools. Finally, the secretary is 
required to conduct an evaluation measuring the effectiveness 
of the program on charter schools, including student 
achievement. A rigorous evaluation is critical to determining 
whether the program has been successful in meeting its purpose 
of supporting high-quality charter schools.
    The legislation makes a few key changes to the definitions 
in the program. H.R. 10 adds five new definitions to the 
program: ``charter school support organization,'' ``charter 
management organization,'' ``high-quality charter school,'' 
``replicated high-quality charter school model,'' and 
``expanded high-quality charter school.'' The bill outlines 
charter schools must comply with the Americans with 
Disabilities Act and section 444 of the General Education 
Provisions Act (commonly known as the ``Family Education Rights 
and Privacy Act of 1974''). Additionally, the definition of a 
``charter school'' clarifies these schools must comply with all 
applicable federal laws, such as those listed above and the 
Individuals with Disabilities Education Act, section 504 of the 
Rehabilitation Act, Title VI of the Civil Rights Act of 1964, 
and the other applicable provisions of the Elementary and 
Secondary Education Act. This addition clarifies the 
requirements that must be met by the state grantees and the 
charter schools they support. Another change in the definition 
of a ``charter school'' clarifies admission is permissible to 
the next grade in a school in the same network, known as a 
feeder pattern. The schools must be affiliated and the student 
must be entering the next succeeding grade. Schools may not use 
this provision to stop utilizing a lottery to fill seats 
created through regular attrition; each school must continue to 
abide by the class size as envisioned in the creation of the 
school.

                               CONCLUSION

    H.R. 10, the Success and Opportunity through Quality 
Charter Schools Act, modernizes and streamlines the charter 
school provisions under the Elementary and Secondary Education 
Act. The bill makes needed improvements to emphasize quality, 
accountability, and equity to the Charter School Program to 
better support high-quality charter schools. The bill 
consolidates the current funding streams for charter schools 
under one authorization at $300 million to increase 
efficiencies within the operation of the program and better 
leverage federal funding to improve the program.

                      Section-by-Section Analysis


                         SECTION 1--SHORT TITLE

    States the short title as the ``Success and Opportunity 
through Quality Charter Schools.''

                         SECTION 2--REFERENCES

    References the Elementary and Secondary Education Act.

                  SECTION 3--SUBPART HEADING, PURPOSE

    Amends the subpart heading and states the purpose of the 
Charter School Program.

                     SECTION 4--PROGRAM AUTHORIZED

    Authorizes the Charter School Program.

          SECTION 5--GRANTS TO SUPPORT QUALITY CHARTER SCHOOLS

    Specifies the general requirements of state grants to 
support the startup or expansion and replication of charter 
schools. Specifies the information the Secretary of Education 
will look for in the state application, what assurances the 
grantee will be required to provide, the criteria the secretary 
will use to determine grant winners, and the priorities for 
grant awards.

               SECTION 6--FACILITIES FINANCING ASSISTANCE

    Specifies the general requirements for facilities financing 
assistance. Prioritizes credit enhancement activities over 
state facilities aid.

                     SECTION 7--NATIONAL ACTIVITIES

    Specifies the activities the Secretary of Education will 
support under the program, including disseminating best 
practices, providing technical assistance, operating a startup 
competition for non-state grant winners, operating an expansion 
and replication grant competition for charter management 
organizations, and conducting an evaluation of the program.

                      SECTION 8--RECORDS TRANSFER

    Modifies the provision to encourage more timely delivery of 
records transfer and amends the reference to the Individuals 
with Disabilities Education Act.

                         SECTION 9--DEFINITIONS

    Makes a change to the definition of a ``charter school'' 
and adds definitions for ``charter management organization,'' 
``charter school support organization,'' ``expansion of a high-
quality charter school,'' ``high-quality charter school,'' and 
``replicable, high-quality charter school model.''

              SECTION 10--AUTHORIZATION OF APPROPRIATIONS

    Authorizes the program at $300 million for each year from 
FY 2015 through FY 2020.

                   SECTION 11--CONFORMING AMENDMENTS

    Modifies the Elementary and Secondary Education Act to 
address the changes made under this legislation.

                       Explanation of Amendments

    The amendments, including the amendment in the nature of a 
substitute, are explained in the body of this report.

              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch. H.R. 10 increases the number of high-quality charter 
schools; ensures charter schools share best practices with all 
public schools; improves charter school access and services for 
all students, including students with disabilities and English 
learners; and emphasizes quality and accountability in charter 
school authorizing.

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandates Reform Act, P.L. 104-4) requires a statement of 
whether the provisions of the reported bill include unfunded 
mandates. This issue is addressed in the CBO letter.

                           Earmark Statement

    H.R. 10 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of House Rule XXI.

                            Roll Call Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee Report to include for 
each record vote on a motion to report the measure or matter 
and on any amendments offered to the measure or matter the 
total number of votes for and against and the names of the 
Members voting for and against.


         Statement of General Performance Goals and Objectives

    In accordance with clause (3)(c) of House Rule XIII, the 
goal of H.R. 10 is to improve the quality of and access to 
charter schools. The committee expects the U.S. Department of 
Education to comply with these provisions and implement the law 
in accordance with the stated goal.

                    Duplication of Federal Programs

    No provision of H.R. 10 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The committee estimates that enacting H.R. 10 does not 
specifically direct the completion of any specific rule makings 
within the meaning of 5 U.S.C. 551.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the committee's oversight findings and recommendations are 
reflected in the body of this report.

               New Budget Authority and CBO Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause 3(c)(3) of rule XIII of the Rules of 
the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the committee has received 
the following estimate for H.R. 10 from the Director of the 
Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 18, 2014.
Hon. John Kline,
Chairman, Committee on Education and the Workforce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 10, the Success 
and Opportunity through Quality Charter Schools Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Justin 
Humphrey.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                          Director.
    Enclosure.

H.R. 10--Success and Opportunity through Quality Charter Schools Act

    H.R. 10 would amend and reauthorize both the Charter School 
Programs and the Credit Enhancement for Charter School 
Initiatives under Title V of the Elementary and Secondary 
Education Act of 1965 through fiscal year 2020 and combine them 
into a single authorization. (This authorization would 
automatically be extended one year through 2021 under the 
General Education Provisions Act.) The bill would authorize the 
appropriation of $300 million for each of fiscal years 2015 
through 2021 for grants to states to develop and expand charter 
school facilities and to public and private nonprofit entities 
to develop means of enhancing credit to finance the 
construction and renovation of charter schools.
    For fiscal year 2014, the Congress appropriated about $250 
million for Charter School Programs, but provided no funding 
for Credit Enhancement Initiatives. The previous authorization 
for Charter School Programs expired in 2008 and the previous 
authorization for Credit Enhancement for Charter School 
Initiatives expired in 2004.\1\
---------------------------------------------------------------------------
    \1\For Charter School Programs, prior law authorized the 
appropriation of $300 million for fiscal year 2002 and such sums as 
might be necessary through fiscal year 2008. For Credit Enhancement for 
Charter School Initiatives, prior law authorized the appropriation of 
$150 million for fiscal year 2002 and such sums as might be necessary 
through fiscal year 2004.
---------------------------------------------------------------------------
    As shown in the following table, CBO estimates that 
implementing the bill would cost $1.0 billion over the 2015-
2019 period, assuming appropriation of the authorized amounts. 
The costs of this legislation fall within budget function 500 
(education, training, employment, and social services). For 
this estimate, CBO assumes that spending will follow historical 
patterns for the affected programs.
    Enacting the bill would have no impact on direct spending 
or revenues; therefore, pay-as-you-go procedures do not apply.
    H.R. 10 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act.

----------------------------------------------------------------------------------------------------------------
                                                            By fiscal year, in millions of dollars--
                                               -----------------------------------------------------------------
                                                   2015       2016       2017       2018       2019    2015-2019
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Authorization Level...........................        300        300        300        300        300      1,500
Estimated Outlays.............................         15        150        255        300        300      1,020
----------------------------------------------------------------------------------------------------------------

    The CBO staff contact for this estimate is Justin Humphrey. 
This estimate was approved by Peter H. Fontaine, Assistant 
Director for Budget Analysis.

                        Committee Cost Estimate

    Clause 3(d)(1) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison of the 
costs that would be incurred in carrying out H.R. 10. However, 
clause 3(d)(2)(B) of that rule provides that this requirement 
does not apply when the committee has included in its report a 
timely submitted cost estimate of the bill prepared by the 
Director of the Congressional Budget Office under section 402 
of the Congressional Budget Act.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

ELEMENTARY AND SECONDARY EDUCATION ACT OF 1965

           *       *       *       *       *       *       *



SEC. 2. TABLE OF CONTENTS.

  The table of contents for this Act is as follows:

     * * * * * * *

   TITLE V--PROMOTING INFORMED PARENTAL CHOICE AND INNOVATIVE PROGRAMS

     * * * * * * *

                     Part B--Public Charter Schools

                   [Subpart 1--Charter School Programs

                    Subpart 1--Charter School Program

     * * * * * * *
[Sec. 5203. Applications.
[Sec. 5204. Administration.]
Sec. 5203. Grants to support high-quality charter schools.
Sec. 5204. Facilities financing assistance.
     * * * * * * *

  [Subpart 2--Credit Enhancement Initiatives To Assist Charter School 
           Facility Acquisition, Construction, and Renovation

[Sec. 5221. Purpose.
[Sec. 5222. Grants to eligible entities.
[Sec. 5223. Applications.
[Sec. 5224. Charter school objectives.
[Sec. 5225. Reserve account.
[Sec. 5226. Limitation on administrative costs.
[Sec. 5227. Audits and reports.
[Sec. 5228. No full faith and credit for grantee obligations.
[Sec. 5229. Recovery of funds.
[Sec. 5230. Definitions.
[Sec. 5231. Authorization of appropriations.]

           *       *       *       *       *       *       *


TITLE V--PROMOTING INFORMED PARENTAL CHOICE AND INNOVATIVE PROGRAMS

           *       *       *       *       *       *       *


                     PART B--PUBLIC CHARTER SCHOOLS

      Subpart 1--[Charter School Programs] Charter School Program

[SEC. 5201. PURPOSE.

   [It is the purpose of this subpart to increase national 
understanding of the charter schools model by--
          [(1) providing financial assistance for the planning, 
        program design, and initial implementation of charter 
        schools;
          [(2) evaluating the effects of such schools, 
        including the effects on students, student academic 
        achievement, staff, and parents;
          [(3) expanding the number of high-quality charter 
        schools available to students across the Nation; and
          [(4) encouraging the States to provide support to 
        charter schools for facilities financing in an amount 
        more nearly commensurate to the amount the States have 
        typically provided for traditional public schools.

[SEC. 5202. PROGRAM AUTHORIZED.

  [(a) In General.--The Secretary may award grants to State 
educational agencies having applications approved pursuant to 
section 5203 to enable such agencies to conduct a charter 
school grant program in accordance with this subpart.
  [(b) Special Rule.--If a State educational agency elects not 
to participate in the program authorized by this subpart or 
does not have an application approved under section 5203, the 
Secretary may award a grant to an eligible applicant that 
serves such State and has an application approved pursuant to 
section 5203(c).
  [(c) Program Periods.--
          [(1) Grants to states.--Grants awarded to State 
        educational agencies under this subpart shall be for a 
        period of not more than 3 years.
          [(2) Grants to eligible applicants.--Grants awarded 
        by the Secretary to eligible applicants or subgrants 
        awarded by State educational agencies to eligible 
        applicants under this subpart shall be for a period of 
        not more than 3 years, of which the eligible applicant 
        may use--
                  [(A) not more than 18 months for planning and 
                program design;
                  [(B) not more than 2 years for the initial 
                implementation of a charter school; and
                  [(C) not more than 2 years to carry out 
                dissemination activities described in section 
                5204(f)(6)(B).
  [(d) Limitation.--A charter school may not receive--
          [(1) more than one grant for activities described in 
        subparagraphs (A) and (B) of subsection (c)(2); or
          [(2) more than one grant for activities under 
        subparagraph (C) of subsection (c)(2).
  [(e) Priority Treatment.--
          [(1) In general.--In awarding grants under this 
        subpart for fiscal year 2002 or any succeeding fiscal 
        year from any funds appropriated under section 5211 
        (other than funds reserved to carry out section 
        5205(b)), the Secretary shall give priority to States 
        to the extent that the States meet the criteria 
        described in paragraph (2) and one or more of the 
        criteria described in subparagraph (A), (B), or (C) of 
        paragraph (3).
          [(2) Review and evaluation priority criteria.--The 
        criteria referred to in paragraph (1) are that the 
        State provides for periodic review and evaluation by 
        the authorized public chartering agency of each charter 
        school, at least once every 5 years unless required 
        more frequently by State law, to determine whether the 
        charter school is meeting the terms of the school's 
        charter, and is meeting or exceeding the student 
        academic achievement requirements and goals for charter 
        schools as set forth under State law or the school's 
        charter.
          [(3) Priority criteria.--The criteria referred to in 
        paragraph (1) are the following:
                  [(A) The State has demonstrated progress, in 
                increasing the number of high-quality charter 
                schools that are held accountable in the terms 
                of the schools' charters for meeting clear and 
                measurable objectives for the educational 
                progress of the students attending the schools, 
                in the period prior to the period for which a 
                State educational agency or eligible applicant 
                applies for a grant under this subpart.
                  [(B) The State--
                          [(i) provides for one authorized 
                        public chartering agency that is not a 
                        local educational agency, such as a 
                        State chartering board, for each 
                        individual or entity seeking to operate 
                        a charter school pursuant to such State 
                        law; or
                          [(ii) in the case of a State in which 
                        local educational agencies are the only 
                        authorized public chartering agencies, 
                        allows for an appeals process for the 
                        denial of an application for a charter 
                        school.
                  [(C) The State ensures that each charter 
                school has a high degree of autonomy over the 
                charter school's budgets and expenditures.
  [(f) Amount Criteria.--In determining the amount of a grant 
to be awarded under this subpart to a State educational agency, 
the Secretary shall take into consideration the number of 
charter schools that are operating, or are approved to open, in 
the State.

[SEC. 5203. APPLICATIONS.

  [(a) Applications From State Agencies.--Each State 
educational agency desiring a grant from the Secretary under 
this subpart shall submit to the Secretary an application at 
such time, in such manner, and containing or accompanied by 
such information as the Secretary may require.
  [(b) Contents of a State Educational Agency Application.--
Each application submitted pursuant to subsection (a) shall--
          [(1) describe the objectives of the State educational 
        agency's charter school grant program and a description 
        of how such objectives will be fulfilled, including 
        steps taken by the State educational agency to inform 
        teachers, parents, and communities of the State 
        educational agency's charter school grant program; and
          [(2) describe how the State educational agency--
                  [(A) will inform each charter school in the 
                State regarding--
                          [(i) Federal funds that the charter 
                        school is eligible to receive; and
                          [(ii) Federal programs in which the 
                        charter school may participate;
                  [(B) will ensure that each charter school in 
                the State receives the charter school's 
                commensurate share of Federal education funds 
                that are allocated by formula each year, 
                including during the first year of operation of 
                the charter school; and
                  [(C) will disseminate best or promising 
                practices of charter schools to each local 
                educational agency in the State; and
          [(3) contain assurances that the State educational 
        agency will require each eligible applicant desiring to 
        receive a subgrant to submit an application to the 
        State educational agency containing--
                  [(A) a description of the educational program 
                to be implemented by the proposed charter 
                school, including--
                          [(i) how the program will enable all 
                        students to meet challenging State 
                        student academic achievement standards;
                          [(ii) the grade levels or ages of 
                        children to be served; and
                          [(iii) the curriculum and 
                        instructional practices to be used;
                  [(B) a description of how the charter school 
                will be managed;
                  [(C) a description of--
                          [(i) the objectives of the charter 
                        school; and
                          [(ii) the methods by which the 
                        charter school will determine its 
                        progress toward achieving those 
                        objectives;
                  [(D) a description of the administrative 
                relationship between the charter school and the 
                authorized public chartering agency;
                  [(E) a description of how parents and other 
                members of the community will be involved in 
                the planning, program design, and 
                implementation of the charter school;
                  [(F) a description of how the authorized 
                public chartering agency will provide for 
                continued operation of the school once the 
                Federal grant has expired, if such agency 
                determines that the school has met the 
                objectives described in subparagraph (C)(i);
                  [(G) a request and justification for waivers 
                of any Federal statutory or regulatory 
                provisions that the eligible applicant believes 
                are necessary for the successful operation of 
                the charter school, and a description of any 
                State or local rules, generally applicable to 
                public schools, that will be waived for, or 
                otherwise not apply to, the school;
                  [(H) a description of how the subgrant funds 
                or grant funds, as appropriate, will be used, 
                including a description of how such funds will 
                be used in conjunction with other Federal 
                programs administered by the Secretary;
                  [(I) a description of how students in the 
                community will be--
                          [(i) informed about the charter 
                        school; and
                          [(ii) given an equal opportunity to 
                        attend the charter school;
                  [(J) an assurance that the eligible applicant 
                will annually provide the Secretary and the 
                State educational agency such information as 
                may be required to determine if the charter 
                school is making satisfactory progress toward 
                achieving the objectives described in 
                subparagraph (C)(i);
                  [(K) an assurance that the eligible applicant 
                will cooperate with the Secretary and the State 
                educational agency in evaluating the program 
                assisted under this subpart;
                  [(L) a description of how a charter school 
                that is considered a local educational agency 
                under State law, or a local educational agency 
                in which a charter school is located, will 
                comply with sections 613(a)(5) and 613(e)(1)(B) 
                of the Individuals with Disabilities Education 
                Act;
                  [(M) if the eligible applicant desires to use 
                subgrant funds for dissemination activities 
                under section 5202(c)(2)(C), a description of 
                those activities and how those activities will 
                involve charter schools and other public 
                schools, local educational agencies, 
                developers, and potential developers; and
                  [(N) such other information and assurances as 
                the Secretary and the State educational agency 
                may require.
  [(c) Eligible Applicant Application.--Each eligible applicant 
desiring a grant pursuant to section 5202(b) shall submit an 
application to the Secretary at such time, in such manner, and 
accompanied by such information as the Secretary may reasonably 
require.
  [(d) Contents of Eligible Applicant Application.--Each 
application submitted pursuant to subsection (c) shall 
contain--
          [(1) the information and assurances described in 
        subparagraphs (A) through (N) of subsection (b)(3), 
        except that for purposes of this subsection 
        subparagraphs (J), (K), and (N) of such subsection 
        shall be applied by striking ``and the State 
        educational agency'' each place such term appears;
          [(2) assurances that the State educational agency--
                  [(A) will grant, or will obtain, waivers of 
                State statutory or regulatory requirements; and
                  [(B) will assist each subgrantee in the State 
                in receiving a waiver under section 5204(e); 
                and
          [(3) assurances that the eligible applicant has 
        provided its authorized public chartering authority 
        timely notice, and a copy, of the application, except 
        that the State educational agency (or the Secretary, in 
        the case of an application submitted to the Secretary) 
        may waive the requirement of this paragraph in the case 
        of an application for a precharter planning grant or 
        subgrant if the authorized public chartering authority 
        to which a charter school proposal will be submitted 
        has not been determined at the time the grant or 
        subgrant application is submitted.

[SEC. 5204. ADMINISTRATION.

  [(a) Selection Criteria for State Educational Agencies.--The 
Secretary shall award grants to State educational agencies 
under this subpart on the basis of the quality of the 
applications submitted under section 5203(b), after taking into 
consideration such factors as--
          [(1) the contribution that the charter schools grant 
        program will make to assisting educationally 
        disadvantaged and other students in meeting State 
        academic content standards and State student academic 
        achievement standards;
          [(2) the degree of flexibility afforded by the State 
        educational agency to charter schools under the State's 
        charter schools law;
          [(3) the ambitiousness of the objectives for the 
        State charter school grant program;
          [(4) the quality of the strategy for assessing 
        achievement of those objectives;
          [(5) the likelihood that the charter school grant 
        program will meet those objectives and improve 
        educational results for students;
          [(6) the number of high-quality charter schools 
        created under this subpart in the State; and
          [(7) in the case of State educational agencies that 
        propose to use grant funds to support dissemination 
        activities under subsection (f)(6)(B), the quality of 
        those activities and the likelihood that those 
        activities will improve student academic achievement.
  [(b) Selection Criteria for Eligible Applicants.--The 
Secretary shall award grants to eligible applicants under this 
subpart on the basis of the quality of the applications 
submitted under section 5203(c), after taking into 
consideration such factors as--
          [(1) the quality of the proposed curriculum and 
        instructional practices;
          [(2) the degree of flexibility afforded by the State 
        educational agency and, if applicable, the local 
        educational agency to the charter school;
          [(3) the extent of community support for the 
        application;
          [(4) the ambitiousness of the objectives for the 
        charter school;
          [(5) the quality of the strategy for assessing 
        achievement of those objectives;
          [(6) the likelihood that the charter school will meet 
        those objectives and improve educational results for 
        students; and
          [(7) in the case of an eligible applicant that 
        proposes to use grant funds to support dissemination 
        activities under subsection (f)(6)(B), the quality of 
        those activities and the likelihood that those 
        activities will improve student achievement.
  [(c) Peer Review.--The Secretary, and each State educational 
agency receiving a grant under this subpart, shall use a peer 
review process to review applications for assistance under this 
subpart.
  [(d) Diversity of Projects.--The Secretary and each State 
educational agency receiving a grant under this subpart, shall 
award grants and subgrants under this subpart in a manner that, 
to the extent possible, ensures that such grants and 
subgrants--
          [(1) are distributed throughout different areas of 
        the Nation and each State, including urban and rural 
        areas; and
          [(2) will assist charter schools representing a 
        variety of educational approaches, such as approaches 
        designed to reduce school size.
  [(e) Waivers.--The Secretary may waive any statutory or 
regulatory requirement over which the Secretary exercises 
administrative authority except any such requirement relating 
to the elements of a charter school described in section 
5210(1), if--
          [(1) the waiver is requested in an approved 
        application under this subpart; and
          [(2) the Secretary determines that granting such a 
        waiver will promote the purpose of this subpart.
  [(f) Use of Funds.--
          [(1) State educational agencies.--Each State 
        educational agency receiving a grant under this subpart 
        shall use such grant funds to award subgrants to one or 
        more eligible applicants in the State to enable such 
        applicant to plan and implement a charter school in 
        accordance with this subpart, except that the State 
        educational agency may reserve not more than 10 percent 
        of the grant funds to support dissemination activities 
        described in paragraph (6).
          [(2) Eligible applicants.--Each eligible applicant 
        receiving funds from the Secretary or a State 
        educational agency shall use such funds to plan and 
        implement a charter school, or to disseminate 
        information about the charter school and successful 
        practices in the charter school, in accordance with 
        this subpart.
          [(3) Allowable activities.--An eligible applicant 
        receiving a grant or subgrant under this subpart may 
        use the grant or subgrant funds only for--
                  [(A) post-award planning and design of the 
                educational program, which may include--
                          [(i) refinement of the desired 
                        educational results and of the methods 
                        for measuring progress toward achieving 
                        those results; and
                          [(ii) professional development of 
                        teachers and other staff who will work 
                        in the charter school; and
                  [(B) initial implementation of the charter 
                school, which may include--
                          [(i) informing the community about 
                        the school;
                          [(ii) acquiring necessary equipment 
                        and educational materials and supplies;
                          [(iii) acquiring or developing 
                        curriculum materials; and
                          [(iv) other initial operational costs 
                        that cannot be met from State or local 
                        sources.
          [(4) Administrative expenses.--
                  [(A) State educational agency administrative 
                expenses.--Each State educational agency 
                receiving a grant pursuant to this subpart may 
                reserve not more than 5 percent of such grant 
                funds for administrative expenses associated 
                with the charter school grant program assisted 
                under this subpart.
                  [(B) Local administrative expenses.--A local 
                educational agency may not deduct funds for 
                administrative fees or expenses from a subgrant 
                awarded to an eligible applicant, unless the 
                eligible applicant enters voluntarily into a 
                mutually agreed upon arrangement for 
                administrative services with the relevant local 
                educational agency. Absent such approval, the 
                local educational agency shall distribute all 
                such subgrant funds to the eligible applicant 
                without delay.
          [(5) Revolving loan funds.--Each State educational 
        agency receiving a grant pursuant to this subpart may 
        reserve not more than 10 percent of the grant funds for 
        the establishment of a revolving loan fund. Such fund 
        may be used to make loans to eligible applicants that 
        have received a subgrant under this subpart, under such 
        terms as may be determined by the State educational 
        agency, for the initial operation of the charter school 
        grant program of the eligible applicant until such time 
        as the recipient begins receiving ongoing operational 
        support from State or local financing sources.
          [(6) Dissemination.--
                  [(A) In general.--A charter school may apply 
                for funds under this subpart, whether or not 
                the charter school has applied for or received 
                funds under this subpart for planning, program 
                design, or implementation, to carry out the 
                activities described in subparagraph (B) if the 
                charter school has been in operation for at 
                least 3 consecutive years and has demonstrated 
                overall success, including--
                          [(i) substantial progress in 
                        improving student academic achievement;
                          [(ii) high levels of parent 
                        satisfaction; and
                          [(iii) the management and leadership 
                        necessary to overcome initial start-up 
                        problems and establish a thriving, 
                        financially viable charter school.
                  [(B) Activities.--A charter school described 
                in subparagraph (A) may use funds reserved 
                under paragraph (1) to assist other schools in 
                adapting the charter school's program (or 
                certain aspects of the charter school's 
                program), or to disseminate information about 
                the charter school, through such activities 
                as--
                          [(i) assisting other individuals with 
                        the planning and start-up of one or 
                        more new public schools, including 
                        charter schools, that are independent 
                        of the assisting charter school and the 
                        assisting charter school's developers, 
                        and that agree to be held to at least 
                        as high a level of accountability as 
                        the assisting charter school;
                          [(ii) developing partnerships with 
                        other public schools, including charter 
                        schools, designed to improve student 
                        academic achievement in each of the 
                        schools participating in the 
                        partnership;
                          [(iii) developing curriculum 
                        materials, assessments, and other 
                        materials that promote increased 
                        student achievement and are based on 
                        successful practices within the 
                        assisting charter school; and
                          [(iv) conducting evaluations and 
                        developing materials that document the 
                        successful practices of the assisting 
                        charter school and that are designed to 
                        improve student performance in other 
                        schools.
  [(g) Tribally Controlled Schools.--Each State that receives a 
grant under this subpart and designates a tribally controlled 
school as a charter school shall not consider payments to a 
school under the Tribally Controlled Schools Act of 1988 (25 
U.S.C. 2507) in determining--
          [(1) the eligibility of the school to receive any 
        other Federal, State, or local aid; or
          [(2) the amount of such aid.

[SEC. 5205. NATIONAL ACTIVITIES.

  [(a) In General.--The Secretary shall reserve for each fiscal 
year the greater of 5 percent or $5,000,000 of the amount 
appropriated to carry out this subpart, except that in no 
fiscal year shall the total amount so reserved exceed 
$8,000,000, to carry out the following activities:
          [(1) To provide charter schools, either directly or 
        through State educational agencies, with--
                  [(A) information regarding--
                          [(i) Federal funds that charter 
                        schools are eligible to receive; and
                          [(ii) other Federal programs in which 
                        charter schools may participate; and
                  [(B) assistance in applying for Federal 
                education funds that are allocated by formula, 
                including assistance with filing deadlines and 
                submission of applications.
          [(2) To provide for other evaluations or studies that 
        include the evaluation of the impact of charter schools 
        on student academic achievement, including information 
        regarding--
                  [(A) students attending charter schools 
                reported on the basis of race, age, disability, 
                gender, limited English proficiency, and 
                previous enrollment in public school; and
                  [(B) the professional qualifications of 
                teachers within a charter school and the 
                turnover of the teaching force.
          [(3) To provide--
                  [(A) information to applicants for assistance 
                under this subpart;
                  [(B) assistance to applicants for assistance 
                under this subpart with the preparation of 
                applications under section 5203;
                  [(C) assistance in the planning and startup 
                of charter schools;
                  [(D) training and technical assistance to 
                existing charter schools; and
                  [(E) for the dissemination to other public 
                schools of best or promising practices in 
                charter schools.
          [(4) To provide (including through the use of one or 
        more contracts that use a competitive bidding process) 
        for the collection of information regarding the 
        financial resources available to charter schools, 
        including access to private capital, and to widely 
        disseminate to charter schools any such relevant 
        information and model descriptions of successful 
        programs.
          [(5) To carry out evaluations of, technical 
        assistance for, and information dissemination 
        regarding, the per-pupil facilities aid programs. In 
        carrying out the evaluations, the Secretary may carry 
        out one or more evaluations of State programs assisted 
        under this subsection, which shall, at a minimum, 
        address--
                  [(A) how, and the extent to which, the 
                programs promote educational equity and 
                excellence; and
                  [(B) the extent to which charter schools 
                supported through the programs are--
                          [(i) held accountable to the public;
                          [(ii) effective in improving public 
                        education; and
                          [(iii) open and accessible to all 
                        students.
  [(b) Per-Pupil Facilities Aid Programs.--
          [(1) Definition of per-pupil facilities aid 
        program.--In this subsection, the term ``per-pupil 
        facilities aid program'' means a program in which a 
        State makes payments, on a per-pupil basis, to charter 
        schools to provide the schools with financing--
                  [(A) that is dedicated solely for funding 
                charter school facilities; or
                  [(B) a portion of which is dedicated for 
                funding charter school facilities.
          [(2) Grants.--
                  [(A) In general.--From the amount made 
                available to carry out this subsection under 
                paragraphs (2) and (3)(B) of section 5211(b) 
                for any fiscal year, the Secretary shall make 
                grants, on a competitive basis, to States to 
                pay for the Federal share of the cost of 
                establishing or enhancing, and administering 
                per-pupil facilities aid programs.
                  [(B) Period.--The Secretary shall award 
                grants under this subsection for periods of not 
                more than 5 years.
                  [(C) Federal share.--The Federal share of the 
                cost described in subparagraph (A) for a per-
                pupil facilities aid program shall be not more 
                than--
                          [(i) 90 percent of the cost, for the 
                        first fiscal year for which the program 
                        receives assistance under this 
                        subsection;
                          [(ii) 80 percent in the second such 
                        year;
                          [(iii) 60 percent in the third such 
                        year;
                          [(iv) 40 percent in the fourth such 
                        year; and
                          [(v) 20 percent in the fifth such 
                        year.
          [(3) Use of funds.--
                  [(A) In general.--A State that receives a 
                grant under this subsection shall use the funds 
                made available through the grant to establish 
                or enhance, and administer, a per-pupil 
                facilities aid program for charter schools in 
                the State.
                  [(B) Evaluations; technical assistance; 
                dissemination.--From the amount made available 
                to a State through a grant under this 
                subsection for a fiscal year, the State may 
                reserve not more than 5 percent to carry out 
                evaluations, to provide technical assistance, 
                and to disseminate information.
                  [(C) Supplement, not supplant.--Funds made 
                available under this subsection shall be used 
                to supplement, and not supplant, State and 
                local public funds expended to provide per 
                pupil facilities aid programs, operations 
                financing programs, or other programs, for 
                charter schools.
          [(4) Requirements.--
                  [(A) Voluntary participation.--No State may 
                be required to participate in a program carried 
                out under this subsection.
                  [(B) State law.--To be eligible to receive a 
                grant under this subsection, a State shall 
                establish or enhance, and administer, a per-
                pupil facilities aid program for charter 
                schools in the State, that--
                          [(i) is specified in State law; and
                          [(ii) provides annual financing, on a 
                        per-pupil basis, for charter school 
                        facilities.
          [(5) Applications.--To be eligible to receive a grant 
        under this subsection, a State shall submit an 
        application to the Secretary at such time, in such 
        manner, and containing such information as the 
        Secretary may require.
          [(6) Priorities.--In making grants under this 
        subsection, the Secretary shall give priority to States 
        that meet the criteria described in paragraph (2), and 
        subparagraphs (A), (B), and (C) of paragraph (3), of 
        section 5202(e).
  [(c) Rule of Construction.--Nothing in this section shall be 
construed to require charter schools to collect any data 
described in subsection (a).]

SEC. 5201. PURPOSE.

  It is the purpose of this subpart to--
          (1) improve the United States education system and 
        education opportunities for all Americans by supporting 
        innovation in public education in public school 
        settings that prepare students to compete and 
        contribute to the global economy;
          (2) provide financial assistance for the planning, 
        program design, and initial implementation of charter 
        schools;
          (3) expand the number of high-quality charter schools 
        available to students across the Nation;
          (4) evaluate the impact of such schools on student 
        achievement, families, and communities, and share best 
        practices between charter schools and other public 
        schools;
          (5) encourage States to provide support to charter 
        schools for facilities financing in an amount more 
        nearly commensurate to the amount the States have 
        typically provided for traditional public schools;
          (6) improve student services to increase 
        opportunities for students with disabilities, limited 
        English proficient students, and other traditionally 
        underserved students to attend charter schools and meet 
        challenging State academic achievement standards;
          (7) support efforts to strengthen the charter school 
        authorizing process to improve performance management, 
        including transparency, oversight, monitoring, and 
        evaluation of such schools; and
          (8) support quality accountability and transparency 
        in the operational performance of all authorized public 
        chartering agencies, which include State educational 
        agencies, local educational agencies, and other 
        authorizing entities.

SEC. 5202. PROGRAM AUTHORIZED.

  (a) In General.--This subpart authorizes the Secretary to 
carry out a charter school program that supports charter 
schools that serve elementary school and secondary school 
students by--
          (1) supporting the startup of charter schools, and 
        the replication and expansion of high-quality charter 
        schools;
          (2) assisting charter schools in accessing credit to 
        acquire and renovate facilities for school use; and
          (3) carrying out national activities to support--
                  (A) charter school development;
                  (B) the dissemination of best practices of 
                charter schools for all schools;
                  (C) the evaluation of the impact of the 
                program on schools participating in the 
                program; and
                  (D) stronger charter school authorizing.
  (b) Funding Allotment.--From the amount made available under 
section 5211 for a fiscal year, the Secretary shall--
          (1) reserve 12.5 percent to support charter school 
        facilities assistance under section 5204;
          (2) reserve not more than 10 percent to carry out 
        national activities under section 5205; and
          (3) use the remaining amount after the Secretary 
        reserves funds under paragraphs (1) and (2) to carry 
        out section 5203.
  (c) Prior Grants and Subgrants.--The recipient of a grant or 
subgrant under this subpart or subpart 2, as such subpart was 
in effect on the day before the date of enactment of the 
Success and Opportunity through Quality Charter Schools Act, 
shall continue to receive funds in accordance with the terms 
and conditions of such grant or subgrant.

SEC. 5203. GRANTS TO SUPPORT HIGH-QUALITY CHARTER SCHOOLS.

  (a) In General.--From the amount reserved under section 
5202(b)(3), the Secretary shall award grants to State entities 
having applications approved pursuant to subsection (f) to 
enable such entities to--
          (1) award subgrants to eligible applicants for 
        opening and preparing to operate--
                  (A) new charter schools;
                  (B) replicated, high-quality charter school 
                models; or
                  (C) expanded, high-quality charter schools; 
                and
          (2) provide technical assistance to eligible 
        applicants and authorized public chartering agencies in 
        carrying out the activities described in paragraph (1) 
        and work with authorized public chartering agencies in 
        the State to improve authorizing quality.
  (b) State Uses of Funds.--
          (1) In general.--A State entity receiving a grant 
        under this section shall--
                  (A) use not less than 90 percent of the grant 
                funds to award subgrants to eligible 
                applicants, in accordance with the quality 
                charter school program described in the State 
                entity's application approved pursuant to 
                subsection (f), for the purposes described in 
                subparagraphs (A) through (C) of subsection 
                (a)(1);
                  (B) reserve not less than 7 percent of such 
                funds to carry out the activities described in 
                subsection (a)(2); and
                  (C) reserve not more than 3 percent of such 
                funds for administrative costs which may 
                include technical assistance.
          (2) Contracts and grants.--A State entity may use a 
        grant received under this section to carry out the 
        activities described in subparagraphs (A) and (B) of 
        paragraph (1) directly or through grants, contracts, or 
        cooperative agreements.
          (3) Rule of construction.--Nothing in this Act shall 
        prohibit the Secretary from awarding grants to States 
        that use a weighted lottery to give slightly better 
        chances for admission to all, or a subset of, 
        educationally disadvantaged students if--
                  (A) the use of weighted lotteries in favor of 
                such students is not prohibited by State law, 
                and such State law is consistent with laws 
                described in section 5210(1)(G); and
                  (B) such weighted lotteries are not used for 
                the purpose of creating schools exclusively to 
                serve a particular subset of students.
  (c) Program Periods; Peer Review; Grant Number and Amount; 
Diversity of Projects; Waivers.--
          (1) Program periods.--
                  (A) Grants.--A grant awarded by the Secretary 
                to a State entity under this section shall be 
                for a period of not more than 5 years.
                  (B) Subgrants.--A subgrant awarded by a State 
                entity under this section shall be for a period 
                of not more than 5 years, of which an eligible 
                applicant may use not more than 18 months for 
                planning and program design.
          (2) Peer review.--The Secretary, and each State 
        entity receiving a grant under this section, shall use 
        a peer review process to review applications for 
        assistance under this section.
          (3) Grant awards.--The Secretary shall--
                  (A) for each fiscal year for which funds are 
                appropriated under section 5211--
                          (i) award not less than 3 grants 
                        under this section;
                          (ii) wholly fund each grant awarded 
                        under this section, without making 
                        continuation awards; and
                          (iii) fully obligate the funds 
                        appropriated for the purpose of 
                        awarding grants under this section in 
                        the fiscal year for which such grants 
                        are awarded; and
                  (B) midway through the grant period of each 
                grant awarded under this section to a State 
                entity, review the grant to determine whether 
                the State entity will meet the agreed upon uses 
                of funds in the State entity's application, and 
                if not, reallot the grant funds that will not 
                be used for such agreed upon uses of funds to 
                other State entities during the succeeding 
                grant competition under this section.
          (4) Diversity of projects.--Each State entity 
        receiving a grant under this section shall award 
        subgrants under this section in a manner that, to the 
        extent possible, ensures that such subgrants--
                  (A) are distributed throughout different 
                areas, including urban, suburban, and rural 
                areas; and
                  (B) will assist charter schools representing 
                a variety of educational approaches.
          (5) Waivers.--The Secretary may waive any statutory 
        or regulatory requirement over which the Secretary 
        exercises administrative authority except any such 
        requirement relating to the elements of a charter 
        school described in section 5210(1), if--
                  (A) the waiver is requested in an approved 
                application under this section; and
                  (B) the Secretary determines that granting 
                such a waiver will promote the purpose of this 
                subpart.
  (d) Limitations.--
          (1) Grants.--A State entity may not receive more than 
        1 grant under this section for a 5-year period.
          (2) Subgrants.--An eligible applicant may not receive 
        more than 1 subgrant under this section per individual 
        charter school for a 5-year period, unless the eligible 
        applicant demonstrates to the State entity not less 
        than 3 years of improved educational results in the 
        areas described in subparagraphs (A) and (D) of section 
        5210(8) for students enrolled in such charter school.
  (e) Applications.--A State entity desiring to receive a grant 
under this section shall submit an application to the Secretary 
at such time and in such manner as the Secretary may require. 
The application shall include the following:
          (1) Description of program.--A description of the 
        State entity's objectives under this section and how 
        the objectives of the program will be carried out, 
        including a description--
                  (A) of how the State entity--
                          (i) will support the opening of new 
                        charter schools, replicated, high-
                        quality charter school models, or 
                        expanded, high-quality charter schools, 
                        and a description of the proposed 
                        number of each type of charter school 
                        or model, if applicable, to be opened 
                        under the State entity's program;
                          (ii) will inform eligible charter 
                        schools, developers, and authorized 
                        public chartering agencies of the 
                        availability of funds under the 
                        program;
                          (iii) will work with eligible 
                        applicants to ensure that the eligible 
                        applicants access all Federal funds 
                        that they are eligible to receive, and 
                        help the charter schools supported by 
                        the applicants and the students 
                        attending the charter schools--
                                  (I) participate in the 
                                Federal programs in which the 
                                schools and students are 
                                eligible to participate;
                                  (II) receive the commensurate 
                                share of Federal funds the 
                                schools and students are 
                                eligible to receive under such 
                                programs; and
                                  (III) meet the needs of 
                                students served under such 
                                programs, including student 
                                with disabilities and English 
                                learners;
                          (iv) will have clear plans and 
                        procedures to assist students enrolled 
                        in a charter school that closes or 
                        loses its charter to attend other high-
                        quality schools;
                          (v) in the case in which the State 
                        entity is not a State educational 
                        agency--
                                  (I) will work with the State 
                                educational agency and the 
                                charter schools in the State to 
                                maximize charter school 
                                participation in Federal and 
                                State programs for charter 
                                schools; and
                                  (II) will work with the State 
                                educational agency to 
                                adequately operate the State 
                                entity's program under this 
                                section, where applicable;
                          (vi) will ensure each eligible 
                        applicant that receives a subgrant 
                        under the State entity's program to 
                        open and prepare to operate a new 
                        charter school, a replicated, high-
                        quality charter school model, or an 
                        expanded, high-quality charter school--
                                  (I) will ensure such school 
                                or model meets the requirements 
                                under section 5210(1); and
                                  (II) is prepared to continue 
                                to operate such school or 
                                model, in a manner consistent 
                                with the eligible applicant's 
                                application, after the subgrant 
                                funds have expired;
                          (vii) will support charter schools in 
                        local educational agencies with large 
                        numbers of schools identified by the 
                        State for improvement;
                          (viii) will work with charter schools 
                        to promote inclusion of all students 
                        and support all students once they are 
                        enrolled to promote retention;
                          (ix) will work with charter schools 
                        on recruitment practices, including 
                        efforts to engage groups that may 
                        otherwise have limited opportunities to 
                        participate in charter schools, and to 
                        ensure such schools do not have in 
                        effect policies or procedures that may 
                        create barriers to enrollment of 
                        students, including educationally 
                        disadvantaged students, and are in 
                        compliance with all Federal and State 
                        laws on enrollment practices;
                          (x) will share best and promising 
                        practices between charter schools and 
                        other public schools, including, where 
                        appropriate, instruction and 
                        professional development in core 
                        academic subjects, and science, 
                        technology, engineering, and math 
                        education, including computer science;
                          (xi) will ensure the charter schools 
                        receiving funds under the State 
                        entity's program meet the educational 
                        needs of their students, including 
                        students with disabilities and English 
                        learners;
                          (xii) will support efforts to 
                        increase quality initiatives, including 
                        meeting the quality authorizing 
                        elements described in paragraph (2)(E);
                          (xiii) in the case of a State entity 
                        not described in clause (xiv), will 
                        provide oversight of authorizing 
                        activity, including how the State will 
                        approve, actively monitor, and re-
                        approve or revoke the authority of an 
                        authorized public chartering agency 
                        based on the performance of the charter 
                        schools authorized by such agency in 
                        the areas of student achievement, 
                        student safety, financial management, 
                        and compliance with all applicable 
                        statutes and regulations; and
                          (xiv) in the case of a State entity 
                        defined in subsection (i)(4), will work 
                        with the State to provide assistance to 
                        and oversight of authorized public 
                        chartering agencies for authorizing 
                        activity described in clause (xiii);
                  (B) of the extent to which the State entity--
                          (i) is able to meet and carry out the 
                        priorities listed in subsection (f)(2); 
                        and
                          (ii) is working to develop or 
                        strengthen a cohesive statewide system 
                        to support the opening of new charter 
                        schools, replicated, high-quality 
                        charter school models, or expanded, 
                        high-quality charter schools;
                  (C) of how the State entity will carry out 
                the subgrant competition, including--
                          (i) a description of the application 
                        each eligible applicant desiring to 
                        receive a subgrant will submit, 
                        including--
                                  (I) a description of the 
                                roles and responsibilities of 
                                eligible applicants, partner 
                                organizations, and management 
                                organizations, including the 
                                administrative and contractual 
                                roles and responsibilities;
                                  (II) a description of the 
                                quality controls agreed to 
                                between the eligible applicant 
                                and the authorized public 
                                chartering agency involved, 
                                such as a contract or 
                                performance agreement, how a 
                                school's performance in the 
                                State's academic accountability 
                                system will be a primary factor 
                                for renewal or revocation of 
                                the school's charter, and how 
                                the State entity and the 
                                authorized public chartering 
                                agency involved will reserve 
                                the right to revoke or not 
                                renew a school's charter based 
                                on financial, structural, or 
                                operational factors involving 
                                the management of the school;
                                  (III) a description of how 
                                the eligible applicant will 
                                solicit and consider input from 
                                parents and other members of 
                                the community on the 
                                implementation and operation of 
                                each charter school receiving 
                                funds under the State entity's 
                                program; and
                                  (IV) a description of the 
                                planned activities and 
                                expenditures for the subgrant 
                                funds for purposes of opening 
                                and preparing to operate a new 
                                charter school, a replicated, 
                                high-quality charter school 
                                model, or an expanded, high-
                                quality charter school, and how 
                                the school or model will 
                                maintain financial 
                                sustainability after the end of 
                                the subgrant period; and
                          (ii) a description of how the State 
                        entity will review applications;
                  (D) in the case of an entity that partners 
                with an outside organization to carry out the 
                State entity's quality charter school program, 
                in whole or in part, of the roles and 
                responsibilities of this partner;
                  (E) of how the State entity will help the 
                charter schools receiving funds under the State 
                entity's program consider the transportation 
                needs of the schools' students; and
                  (F) of how the State entity will support 
                diverse charter school models, including models 
                that serve rural communities.
          (2) Assurances.--Assurances, including a description 
        of how the assurances will be met, that--
                  (A) each charter school receiving funds under 
                the State entity's program will have a high 
                degree of autonomy over budget and operations;
                  (B) the State entity will support charter 
                schools in meeting the educational needs of 
                their students as described in paragraph 
                (1)(A)(x);
                  (C) the State entity will ensure that the 
                authorized public chartering agency of any 
                charter school that receives funds under the 
                State entity's program--
                          (i) adequately monitors each charter 
                        school in recruiting, enrolling, and 
                        meeting the needs of all students, 
                        including students with disabilities 
                        and English learners; and
                          (ii) ensures that each charter school 
                        solicits and considers input from 
                        parents and other members of the 
                        community on the implementation and 
                        operation of the school;
                  (D) the State entity will provide adequate 
                technical assistance to eligible applicants 
                to--
                          (i) meet the objectives described in 
                        clauses (vii) and (viii) of paragraph 
                        (1)(A) and paragraph (2)(B); and
                          (ii) recruit, enroll, and retain 
                        traditionally underserved students, 
                        including students with disabilities 
                        and English learners, at rates similar 
                        to traditional public schools;
                  (E) the State entity will promote quality 
                authorizing, such as through providing 
                technical assistance and supporting all 
                authorized public chartering agencies in the 
                State to improve the oversight of their charter 
                schools, including by--
                          (i) assessing annual performance data 
                        of the schools, including, as 
                        appropriate, graduation rates and 
                        student academic growth;
                          (ii) reviewing the schools' 
                        independent, annual audits of financial 
                        statements conducted in accordance with 
                        generally accepted accounting 
                        principles, and ensuring any such 
                        audits are publically reported; and
                          (iii) holding charter schools 
                        accountable to the academic, financial, 
                        and operational quality controls agreed 
                        to between the charter school and the 
                        authorized public chartering agency 
                        involved, such as through renewal, non-
                        renewal, or revocation of the school's 
                        charter;
                  (F) the State entity will work to ensure that 
                charter schools are included with the 
                traditional public schools in decision-making 
                about the public school system in the State; 
                and
                  (G) the State entity will ensure that each 
                charter school in the State make publicly 
                available, consistent with the dissemination 
                requirements of the annual State report card, 
                information to help parents make informed 
                decisions about the education options available 
                to their children, including information on the 
                educational program, student support services, 
                and annual performance and enrollment data for 
                the groups of students described in section 
                1111(b)(2)(C)(v)(II).
          (3) Requests for waivers.--A request and 
        justification for waivers of any Federal statutory or 
        regulatory provisions that the State entity believes 
        are necessary for the successful operation of the 
        charter schools that will receive funds under the State 
        entity's program under this section, and a description 
        of any State or local rules, generally applicable to 
        public schools, that will be waived, or otherwise not 
        apply to such schools or, in the case of a State entity 
        defined in subsection (i)(4), a description of how the 
        State entity will work with the State to request 
        necessary waivers where applicable.
  (f) Selection Criteria; Priority.--
          (1) Selection criteria.--The Secretary shall award 
        grants to State entities under this section on the 
        basis of the quality of the applications submitted 
        under subsection (e), after taking into consideration--
                  (A) the degree of flexibility afforded by the 
                State's public charter school law and how the 
                State entity will work to maximize the 
                flexibility provided to charter schools under 
                the law;
                  (B) the ambitiousness of the State entity's 
                objectives for the quality charter school 
                program carried out under this section;
                  (C) the quality of the strategy for assessing 
                achievement of those objectives;
                  (D) the likelihood that the eligible 
                applicants receiving subgrants under the 
                program will meet those objectives and improve 
                educational results for students;
                  (E) the State entity's plan to--
                          (i) adequately monitor the eligible 
                        applicants receiving subgrants under 
                        the State entity's program;
                          (ii) work with the authorized public 
                        chartering agencies involved to avoid 
                        duplication of work for the charter 
                        schools and authorized public 
                        chartering agencies; and
                          (iii) provide adequate technical 
                        assistance and support for--
                                  (I) the charter schools 
                                receiving funds under the State 
                                entity's program; and
                                  (II) quality authorizing 
                                efforts in the State; and
                  (F) the State entity's plan to solicit and 
                consider input from parents and other members 
                of the community on the implementation and 
                operation of the charter schools in the State.
          (2) Priority.--In awarding grants under this section, 
        the Secretary shall give priority to State entities to 
        the extent that they meet the following criteria:
                  (A) In the case of a State entity located in 
                a State that allows an entity other than a 
                local educational agency to be an authorized 
                public chartering agency, the State has a 
                quality authorized public chartering agency 
                that is an entity other than a local 
                educational agency.
                  (B) The State entity is located in a State 
                that does not impose any limitation on the 
                number or percentage of charter schools that 
                may exist or the number or percentage of 
                students that may attend charter schools in the 
                State.
                  (C) The State entity is located in a State 
                that ensures equitable financing, as compared 
                to traditional public schools, for charter 
                schools and students in a prompt manner.
                  (D) The State entity is located in a State 
                that uses charter schools and best practices 
                from charter schools to help improve struggling 
                schools and local educational agencies.
                  (E) The State entity partners with an 
                organization that has a demonstrated record of 
                success in developing management organizations 
                to support the development of charter schools 
                in the State.
                  (F) The State entity supports charter schools 
                that support at-risk students through 
                activities such as dropout prevention or 
                dropout recovery.
                  (G) The State entity authorizes all charter 
                schools in the State to serve as school food 
                authorities.
                  (H) The State entity has taken steps to 
                ensure that all authorizing public chartering 
                agencies implement best practices for charter 
                school authorizing.
  (g) Local Uses of Funds.--An eligible applicant receiving a 
subgrant under this section shall use such funds to carry out 
activities related to opening and preparing to operate a new 
charter school, a replicated, high-quality charter school 
model, or an expanded, high-quality charter school, such as--
          (1) preparing teachers and school leaders, including 
        through professional development;
          (2) acquiring equipment, educational materials, and 
        supplies; and
          (3) necessary renovations and minor facilities 
        repairs (excluding construction).
  (h) Reporting Requirements.--Each State entity receiving a 
grant under this section shall submit to the Secretary, at the 
end of the third year of the 5-year grant period and at the end 
of such grant period, a report on--
          (1) the number of students served by each subgrant 
        awarded under this section and, if applicable, how many 
        new students were served during each year of the 
        subgrant period;
          (2) the progress the State entity made toward meeting 
        the priorities described in subsection (f)(2), as 
        applicable;
          (3) how the State entity met the objectives of the 
        quality charter school program described in the State 
        entity's application under subsection (e);
          (4) how the State entity complied with, and ensured 
        that eligible applicants complied with, the assurances 
        described in the State entity's application;
          (5) how the State entity worked with authorized 
        public chartering agencies, including how the agencies 
        worked with the management company or leadership of the 
        schools that received subgrants under this section; and
          (6) the number of subgrants awarded under this 
        section to carry out each of the following:
                  (A) The opening of new charter schools.
                  (B) The opening of replicated, high-quality 
                charter school models.
                  (C) The opening of expanded, high-quality 
                charter schools.
  (i) State Entity Defined.--For purposes of this section, the 
term ``State entity'' means--
          (1) a State educational agency;
          (2) a State charter school board;
          (3) a Governor of a State; or
          (4) a charter school support organization.

SEC. 5204. FACILITIES FINANCING ASSISTANCE.

  (a) Grants to Eligible Entities.--
          (1) In general.--From the amount reserved under 
        section 5202(b)(1), the Secretary shall not use less 
        than 50 percent to award grants to eligible entities 
        that have the highest-quality applications approved 
        under subsection (d), after considering the diversity 
        of such applications, to demonstrate innovative methods 
        of assisting charter schools to address the cost of 
        acquiring, constructing, and renovating facilities by 
        enhancing the availability of loans or bond financing.
          (2) Eligible entity defined.--For purposes of this 
        section, the term ``eligible entity'' means--
                  (A) a public entity, such as a State or local 
                governmental entity;
                  (B) a private nonprofit entity; or
                  (C) a consortium of entities described in 
                subparagraphs (A) and (B).
  (b) Grantee Selection.--The Secretary shall evaluate each 
application submitted under subsection (d), and shall determine 
whether the application is sufficient to merit approval.
  (c) Grant Characteristics.--Grants under subsection (a) shall 
be of a sufficient size, scope, and quality so as to ensure an 
effective demonstration of an innovative means of enhancing 
credit for the financing of charter school acquisition, 
construction, or renovation.
  (d) Applications.--
          (1) In general.--To receive a grant under subsection 
        (a), an eligible entity shall submit to the Secretary 
        an application in such form as the Secretary may 
        reasonably require.
          (2) Contents.--An application submitted under 
        paragraph (1) shall contain--
                  (A) a statement identifying the activities 
                proposed to be undertaken with funds received 
                under subsection (a), including how the 
                eligible entity will determine which charter 
                schools will receive assistance, and how much 
                and what types of assistance charter schools 
                will receive;
                  (B) a description of the involvement of 
                charter schools in the application's 
                development and the design of the proposed 
                activities;
                  (C) a description of the eligible entity's 
                expertise in capital market financing;
                  (D) a description of how the proposed 
                activities will leverage the maximum amount of 
                private-sector financing capital relative to 
                the amount of public funding used and otherwise 
                enhance credit available to charter schools, 
                including how the eligible entity will offer a 
                combination of rates and terms more favorable 
                than the rates and terms that a charter school 
                could receive without assistance from the 
                eligible entity under this section;
                  (E) a description of how the eligible entity 
                possesses sufficient expertise in education to 
                evaluate the likelihood of success of a charter 
                school program for which facilities financing 
                is sought; and
                  (F) in the case of an application submitted 
                by a State governmental entity, a description 
                of the actions that the entity has taken, or 
                will take, to ensure that charter schools 
                within the State receive the funding the 
                charter schools need to have adequate 
                facilities.
  (e) Charter School Objectives.--An eligible entity receiving 
a grant under this section shall use the funds deposited in the 
reserve account established under subsection (f) to assist one 
or more charter schools to access private sector capital to 
accomplish one or more of the following objectives:
          (1) The acquisition (by purchase, lease, donation, or 
        otherwise) of an interest (including an interest held 
        by a third party for the benefit of a charter school) 
        in improved or unimproved real property that is 
        necessary to commence or continue the operation of a 
        charter school.
          (2) The construction of new facilities, or the 
        renovation, repair, or alteration of existing 
        facilities, necessary to commence or continue the 
        operation of a charter school.
          (3) The predevelopment costs required to assess sites 
        for purposes of paragraph (1) or (2) and which are 
        necessary to commence or continue the operation of a 
        charter school.
  (f) Reserve Account.--
          (1) Use of funds.--To assist charter schools to 
        accomplish the objectives described in subsection (e), 
        an eligible entity receiving a grant under subsection 
        (a) shall, in accordance with State and local law, 
        directly or indirectly, alone or in collaboration with 
        others, deposit the funds received under subsection (a) 
        (other than funds used for administrative costs in 
        accordance with subsection (g)) in a reserve account 
        established and maintained by the eligible entity for 
        this purpose. Amounts deposited in such account shall 
        be used by the eligible entity for one or more of the 
        following purposes:
                  (A) Guaranteeing, insuring, and reinsuring 
                bonds, notes, evidences of debt, loans, and 
                interests therein, the proceeds of which are 
                used for an objective described in subsection 
                (e).
                  (B) Guaranteeing and insuring leases of 
                personal and real property for an objective 
                described in subsection (e).
                  (C) Facilitating financing by identifying 
                potential lending sources, encouraging private 
                lending, and other similar activities that 
                directly promote lending to, or for the benefit 
                of, charter schools.
                  (D) Facilitating the issuance of bonds by 
                charter schools, or by other public entities 
                for the benefit of charter schools, by 
                providing technical, administrative, and other 
                appropriate assistance (including the 
                recruitment of bond counsel, underwriters, and 
                potential investors and the consolidation of 
                multiple charter school projects within a 
                single bond issue).
          (2) Investment.--Funds received under this section 
        and deposited in the reserve account established under 
        paragraph (1) shall be invested in obligations issued 
        or guaranteed by the United States or a State, or in 
        other similarly low-risk securities.
          (3) Reinvestment of earnings.--Any earnings on funds 
        received under subsection (a) shall be deposited in the 
        reserve account established under paragraph (1) and 
        used in accordance with such paragraph.
  (g) Limitation on Administrative Costs.--An eligible entity 
may use not more than 2.5 percent of the funds received under 
subsection (a) for the administrative costs of carrying out its 
responsibilities under this section (excluding subsection (k)).
  (h) Audits and Reports.--
          (1) Financial record maintenance and audit.--The 
        financial records of each eligible entity receiving a 
        grant under subsection (a) shall be maintained in 
        accordance with generally accepted accounting 
        principles and shall be subject to an annual audit by 
        an independent public accountant.
          (2) Reports.--
                  (A) Grantee annual reports.--Each eligible 
                entity receiving a grant under subsection (a) 
                annually shall submit to the Secretary a report 
                of its operations and activities under this 
                section.
                  (B) Contents.--Each annual report submitted 
                under subparagraph (A) shall include--
                          (i) a copy of the most recent 
                        financial statements, and any 
                        accompanying opinion on such 
                        statements, prepared by the independent 
                        public accountant reviewing the 
                        financial records of the eligible 
                        entity;
                          (ii) a copy of any report made on an 
                        audit of the financial records of the 
                        eligible entity that was conducted 
                        under paragraph (1) during the 
                        reporting period;
                          (iii) an evaluation by the eligible 
                        entity of the effectiveness of its use 
                        of the Federal funds provided under 
                        subsection (a) in leveraging private 
                        funds;
                          (iv) a listing and description of the 
                        charter schools served during the 
                        reporting period, including the amount 
                        of funds used by each school, the type 
                        of project facilitated by the grant, 
                        and the type of assistance provided to 
                        the charter schools;
                          (v) a description of the activities 
                        carried out by the eligible entity to 
                        assist charter schools in meeting the 
                        objectives set forth in subsection (e); 
                        and
                          (vi) a description of the 
                        characteristics of lenders and other 
                        financial institutions participating in 
                        the activities undertaken by the 
                        eligible entity under this section 
                        (excluding subsection (k)) during the 
                        reporting period.
                  (C) Secretarial report.--The Secretary shall 
                review the reports submitted under subparagraph 
                (A) and shall provide a comprehensive annual 
                report to Congress on the activities conducted 
                under this section (excluding subsection (k)).
  (i) No full Faith and Credit for Grantee Obligation.--No 
financial obligation of an eligible entity entered into 
pursuant to this section (such as an obligation under a 
guarantee, bond, note, evidence of debt, or loan) shall be an 
obligation of, or guaranteed in any respect by, the United 
States. The full faith and credit of the United States is not 
pledged to the payment of funds which may be required to be 
paid under any obligation made by an eligible entity pursuant 
to any provision of this section.
  (j) Recovery of Funds.--
          (1) In general.--The Secretary, in accordance with 
        chapter 37 of title 31, United States Code, shall 
        collect--
                  (A) all of the funds in a reserve account 
                established by an eligible entity under 
                subsection (f)(1) if the Secretary determines, 
                not earlier than 2 years after the date on 
                which the eligible entity first received funds 
                under this section (excluding subsection (k)), 
                that the eligible entity has failed to make 
                substantial progress in carrying out the 
                purposes described in subsection (f)(1); or
                  (B) all or a portion of the funds in a 
                reserve account established by an eligible 
                entity under subsection (f)(1) if the Secretary 
                determines that the eligible entity has 
                permanently ceased to use all or a portion of 
                the funds in such account to accomplish any 
                purpose described in subsection (f)(1).
          (2) Exercise of authority.--The Secretary shall not 
        exercise the authority provided in paragraph (1) to 
        collect from any eligible entity any funds that are 
        being properly used to achieve one or more of the 
        purposes described in subsection (f)(1).
          (3)  Procedures.--The provisions of sections 451, 
        452, and 458 of the General Education Provisions Act 20 
        U.S.C. 124, 1234a, 1234g shall apply to the recovery of 
        funds under paragraph (1).
          (4) Construction.--This subsection shall not be 
        construed to impair or affect the authority of the 
        Secretary to recover funds under part D of the General 
        Education Provisions Act (20 U.S.C. 1234 et seq.).
  (k) Per-pupil Facilities Aid Program.--
          (1) Definition of per-pupil facilities aid program.--
        In this subsection, the term ``per-pupil facilities aid 
        program'' means a program in which a State makes 
        payments, on a per-pupil basis, to charter schools to 
        provide the schools with financing--
                  (A) that is dedicated solely for funding 
                charter school facilities; or
                  (B) a portion of which is dedicated for 
                funding charter school facilities.
          (2) Grants.--
                  (A) In general.--From the amount under 
                section 5202(b)(1) remaining after the 
                Secretary makes grants under subsection (a), 
                the Secretary shall make grants, on a 
                competitive basis, to States to pay for the 
                Federal share of the cost of establishing or 
                enhancing, and administering per-pupil 
                facilities aid programs.
                  (B) Period.--The Secretary shall award grants 
                under this subsection for periods of not more 
                than 5 years.
                  (C) Federal share.--The Federal share of the 
                cost described in subparagraph (A) for a per-
                pupil facilities aid program shall be not more 
                than--
                          (i) 90 percent of the cost, for the 
                        first fiscal year for which the program 
                        receives assistance under this 
                        subsection;
                          (ii) 80 percent in the second such 
                        year;
                          (iii) 60 percent in the third such 
                        year;
                          (iv) 40 percent in the fourth such 
                        year; and
                          (v) 20 percent in the fifth such 
                        year.
                  (D) State share.--A State receiving a grant 
                under this subsection may partner with 1 or 
                more organizations to provide up to 50 percent 
                of the State share of the cost of establishing 
                or enhancing, and administering the per-pupil 
                facilities aid program.
                  (E) Multiple grants.--A State may receive 
                more than 1 grant under this subsection, so 
                long as the amount of such funds provided to 
                charter schools increases with each successive 
                grant.
          (3) Use of funds.--
                  (A) In general.--A State that receives a 
                grant under this subsection shall use the funds 
                made available through the grant to establish 
                or enhance, and administer, a per-pupil 
                facilities aid program for charter schools in 
                the State of the applicant.
                  (B) Evaluations; technical assistance; 
                dissemination.--From the amount made available 
                to a State through a grant under this 
                subsection for a fiscal year, the State may 
                reserve not more than 5 percent to carry out 
                evaluations, to provide technical assistance, 
                and to disseminate information.
                  (C) Supplement, not supplant.--Funds made 
                available under this subsection shall be used 
                to supplement, and not supplant, State and 
                local public funds expended to provide per 
                pupil facilities aid programs, operations 
                financing programs, or other programs, for 
                charter schools.
          (4) Requirements.--
                  (A) Voluntary participation.--No State may be 
                required to participate in a program carried 
                out under this subsection.
                  (B) State law.--
                          (i) In general.--Except as provided 
                        in clause (ii), to be eligible to 
                        receive a grant under this subsection, 
                        a State shall establish or enhance, and 
                        administer, a per-pupil facilities aid 
                        program for charter schools in the 
                        State, that--
                                  (I) is specified in State 
                                law; and
                                  (II) provides annual 
                                financing, on a per-pupil 
                                basis, for charter school 
                                facilities.
                          (ii) Special rule.--Notwithstanding 
                        clause (i), a State that is required 
                        under State law to provide its charter 
                        schools with access to adequate 
                        facility space, but which does not have 
                        a per-pupil facilities aid program for 
                        charter schools specified in State law, 
                        may be eligible to receive a grant 
                        under this subsection if the State 
                        agrees to use the funds to develop a 
                        per-pupil facilities aid program 
                        consistent with the requirements of 
                        this subsection.
          (5) Applications.--To be eligible to receive a grant 
        under this subsection, a State shall submit an 
        application to the Secretary at such time, in such 
        manner, and containing such information as the 
        Secretary may require.

SEC. 5205. NATIONAL ACTIVITIES.

  (a) In General.--From the amount reserved under section 
5202(b)(2), the Secretary shall--
          (1) use not less than 75 percent of such funds to 
        award grants in accordance with subsection (b); and
          (2) use not more than 25 percent of such funds to--
                  (A) provide technical assistance to State 
                entities in awarding subgrants under section 
                5203, and eligible entities and States 
                receiving grants under section 5204;
                  (B) disseminate best practices; and
                  (C) evaluate the impact of the charter school 
                program, including the impact on student 
                achievement, carried out under this subpart.
  (b)  Grants.--
          (1) In general.--The Secretary shall make grants, on 
        a competitive basis, to eligible applicants for the 
        purpose of carrying out the activities described in 
        section 5202(a)(1), subparagraphs (A) through (C) of 
        section 5203(a)(1), and section 5203(g).
          (2) Terms and conditions.--Except as otherwise 
        provided in this subsection, grants awarded under this 
        subsection shall have the same terms and conditions as 
        grants awarded to State entities under section 5203.
          (3) Charter management organizations.--The Secretary 
        shall--
                  (A) use not less than 75 percent of the funds 
                described in subsection (a)(1) to make grants, 
                on a competitive basis, to eligible applicants 
                described in paragraph (4)(C); and
                  (B) notwithstanding paragraphs (1)(A) and (2) 
                of section 5203(f)--
                          (i) award grants to eligible 
                        applicants on the basis of the quality 
                        of the applications submitted under 
                        this subsection; and
                          (ii) in awarding grants to eligible 
                        applicants described in paragraph 
                        (4)(C), give priority to each such 
                        eligible applicant that--
                                  (I) demonstrates a high 
                                proportion of high-quality 
                                charter schools within the 
                                network of the eligible 
                                applicant;
                                  (II) demonstrates success in 
                                serving students who are 
                                educationally disadvantaged;
                                  (III) does not have a 
                                significant proportion of 
                                charter schools that have been 
                                closed, had their charter 
                                revoked for compliance issues, 
                                or had their affiliation with 
                                such eligible applicant 
                                revoked;
                                  (IV) has sufficient 
                                procedures in effect to ensure 
                                timely closure of low-
                                performing or financially-
                                mismanaged charter schools and 
                                clear plans and procedures in 
                                effect for the students in such 
                                schools to attend other high-
                                quality schools; and
                                  (V) demonstrates success in 
                                working with schools identified 
                                for improvement by the State.
          (4) Eligible applicant defined.--For purposes of this 
        subsection, the term ``eligible applicant'' means an 
        eligible applicant (as defined in section 5210) that--
                  (A) desires to open a charter school in--
                          (i) a State that did not apply for a 
                        grant under section 5203; or
                          (ii) a State that did not receive a 
                        grant under section 5203; or
                  (B) is a charter management organization.
  (c) Contracts and Grants.--The Secretary may carry out any of 
the activities described in this section directly or through 
grants, contracts, or cooperative agreements.

           *       *       *       *       *       *       *


SEC. 5208. RECORDS TRANSFER.

  State educational agencies and local educational agencies, as 
quickly as possible and to the extent practicable, shall ensure 
that a student's records and, if applicable, a student's 
individualized education program as defined in [section 602] 
section 602(14) of the Individuals with Disabilities Education 
Act, are transferred to a charter school upon the transfer of 
the student to the charter school, and to another public school 
upon the transfer of the student from a charter school to 
another public school, in accordance with applicable State law.

           *       *       *       *       *       *       *


SEC. 5210. DEFINITIONS.

   In this subpart:
          [(1) Charter school.--The term ``charter school'' 
        means a public school that--
                  [(A) in accordance with a specific State 
                statute authorizing the granting of charters to 
                schools, is exempt from significant State or 
                local rules that inhibit the flexible operation 
                and management of public schools, but not from 
                any rules relating to the other requirements of 
                this paragraph;
                  [(B) is created by a developer as a public 
                school, or is adapted by a developer from an 
                existing public school, and is operated under 
                public supervision and direction;
                  [(C) operates in pursuit of a specific set of 
                educational objectives determined by the 
                school's developer and agreed to by the 
                authorized public chartering agency;
                  [(D) provides a program of elementary or 
                secondary education, or both;
                  [(E) is nonsectarian in its programs, 
                admissions policies, employment practices, and 
                all other operations, and is not affiliated 
                with a sectarian school or religious 
                institution;
                  [(F) does not charge tuition;
                  [(G) complies with the Age Discrimination Act 
                of 1975, title VI of the Civil Rights Act of 
                1964, title IX of the Education Amendments of 
                1972, section 504 of the Rehabilitation Act of 
                1973, and part B of the Individuals with 
                Disabilities Education Act;
                  [(H) is a school to which parents choose to 
                send their children, and that admits students 
                on the basis of a lottery, if more students 
                apply for admission than can be accommodated;
                  [(I) agrees to comply with the same Federal 
                and State audit requirements as do other 
                elementary schools and secondary schools in the 
                State, unless such requirements are 
                specifically waived for the purpose of this 
                program;
                  [(J) meets all applicable Federal, State, and 
                local health and safety requirements;
                  [(K) operates in accordance with State law; 
                and
                  [(L) has a written performance contract with 
                the authorized public chartering agency in the 
                State that includes a description of how 
                student performance will be measured in charter 
                schools pursuant to State assessments that are 
                required of other schools and pursuant to any 
                other assessments mutually agreeable to the 
                authorized public chartering agency and the 
                charter school.]
          (1) Charter school.--The term ``charter school'' 
        means a public school that--
                  (A) in accordance with a specific State 
                statute authorizing the granting of charters to 
                schools, is exempt from significant State or 
                local rules that inhibit the flexible operation 
                and management of public schools, but not from 
                any rules relating to the other requirements of 
                this paragraph;
                  (B) is created by a developer as a public 
                school, or is adapted by a developer from an 
                existing public school, and is operated under 
                public supervision and direction;
                  (C) operates in pursuit of a specific set of 
                educational objectives determined by the 
                school's developer and agreed to by the 
                authorized public chartering agency;
                  (D) provides a program of elementary or 
                secondary education, or both;
                  (E) is nonsectarian in its programs, 
                admissions policies, employment practices, and 
                all other operations, and is not affiliated 
                with a sectarian school or religious 
                institution;
                  (F) does not charge tuition;
                  (G) complies with the Age Discrimination Act 
                of 1975, title VI of the Civil Rights Act of 
                1964, title IX of the Education Amendments of 
                1972, section 504 of the Rehabilitation Act of 
                1973, part B of the Individuals with 
                Disabilities Education Act, the Americans with 
                Disabilities Act of 1990 (42 U.S.C. 12101 et 
                seq.), and section 444 of the General Education 
                Provisions Act (20 U.S.C. 1232(g)) (commonly 
                known as the ``Family Education Rights and 
                Privacy Act of 1974'');
                  (H) is a school to which parents choose to 
                send their children, and admits students on the 
                basis of a lottery if more students apply for 
                admission than can be accommodated, except that 
                in cases in which students who are enrolled in 
                a charter school affiliated (such as by sharing 
                a network) with another charter school, those 
                students may be automatically enrolled in the 
                next grade level at such other charter school, 
                so long as a lottery is used to fill seats 
                created through regular attrition in student 
                enrollment;
                  (I) agrees to comply with the same Federal 
                and State audit requirements as do other 
                elementary schools and secondary schools in the 
                State, unless such State audit requirements are 
                waived by the State;
                  (J) meets all applicable Federal, State, and 
                local health and safety requirements;
                  (K) operates in accordance with State law;
                  (L) has a written performance contract with 
                the authorized public chartering agency in the 
                State that includes a description of how 
                student performance will be measured in charter 
                schools pursuant to State assessments that are 
                required of other schools and pursuant to any 
                other assessments mutually agreeable to the 
                authorized public chartering agency and the 
                charter school; and
                  (M) may serve prekindergarten or 
                postsecondary students.
          (2) Charter management organization.--The term 
        ``charter management organization'' means a not-for-
        profit organization that manages a network of charter 
        schools linked by centralized support, operations, and 
        oversight.
          (3) Charter school support organization.--The term 
        ``charter school support organization'' means a 
        nonprofit, nongovernmental entity that is not an 
        authorized public chartering agency, which provides on 
        a statewide basis--
                  (A) assistance to developers during the 
                planning, program design, and initial 
                implementation of a charter school; and
                  (B) technical assistance to charter schools 
                to operate such schools.
          [(2)] (4) Developer.--The term ``developer'' means an 
        individual or group of individuals (including a public 
        or private nonprofit organization), which may include 
        teachers, administrators and other school staff, 
        parents, or other members of the local community in 
        which a charter school project will be carried out.
          [(3)] (5) Eligible applicant.--The term ``eligible 
        applicant'' means a developer that has--
                  (A) applied to an authorized public 
                chartering authority to operate a charter 
                school; and
                  (B) provided adequate and timely notice to 
                that authority[ under section 5203(d)(3)].
          [(4)] (6) Authorized public chartering agency.--The 
        term ``authorized public chartering agency'' means a 
        State educational agency, local educational agency, or 
        other public entity that has the authority pursuant to 
        State law and approved by the Secretary to authorize or 
        approve a charter school.
          (7) Expanded, high-quality charter school.--The term 
        ``expanded, high-quality charter school'' means a high-
        quality charter school that has either significantly 
        increased its enrollment or added one or more grades to 
        its school.
          (8) High-quality charter school.--The term ``high-
        quality charter school'' means a charter school that--
                  (A) shows evidence of strong academic 
                results, which may include strong academic 
                growth as determined by a State;
                  (B) has no significant issues in the areas of 
                student safety, operational and financial 
                management, or statutory or regulatory 
                compliance;
                  (C) has demonstrated success in significantly 
                increasing student academic achievement, 
                including graduation rates where applicable, 
                consistent with the requirements under title I, 
                for all students served by the charter school; 
                and
                  (D) has demonstrated success in increasing 
                student academic achievement, including 
                graduation rates where applicable, for the 
                groups of students described in section 
                1111(b)(2)(C)(v)(II), except that such 
                demonstration is not required in a case in 
                which the number of students in a group is 
                insufficient to yield statistically reliable 
                information or the results would reveal 
                personally identifiable information about an 
                individual student.
          (9) Replicated, high-quality charter school model.--
        The term ``replicated, high-quality charter school 
        model'' means a high-quality charter school that has 
        opened a new campus under an existing charter or an 
        additional charter if required by State law.

[SEC. 5211. AUTHORIZATION OF APPROPRIATIONS.

  [(a) In General.--There are authorized to be appropriated to 
carry out this subpart $300,000,000 for fiscal year 2002 and 
such sums as may be necessary for each of the 5 succeeding 
fiscal years.
  [(b) Reservation.--From the amount appropriated under 
subsection (a) for each fiscal year, the Secretary shall 
reserve--
          [(1) $200,000,000 to carry out this subpart, other 
        than section 5205(b); and
          [(2) any funds in excess of $200,000,000, that do not 
        exceed $300,000,000, to carry out section 5205(b); and
          [(3)(A) 50 percent of any funds in excess of 
        $300,000,000 to carry out this subpart, other than 
        section 5205(b); and
          [(B) 50 percent of any funds in excess of 
        $300,000,000 to carry out section 5205(b).]

SEC. 5211. AUTHORIZATION OF APPROPRIATIONS.

  There are authorized to be appropriated to carry out this 
subpart $300,000,000 for fiscal year 2015 and each of the 5 
succeeding fiscal years.

  [Subpart 2--Credit Enhancement Initiatives To Assist Charter School 
           Facility Acquisition, Construction, and Renovation

[SEC. 5221. PURPOSE.

  [The purpose of this subpart is to provide grants to eligible 
entities to permit the eligible entities to demonstrate 
innovative credit enhancement initiatives that assist charter 
schools to address the cost of acquiring, constructing, and 
renovating facilities.

[SEC. 5222. GRANTS TO ELIGIBLE ENTITIES.

  [(a) Grants.--The Secretary shall use 100 percent of the 
amount available to carry out this subpart to award not less 
than three grants to eligible entities that have applications 
approved under this subpart to demonstrate innovative methods 
of assisting charter schools to address the cost of acquiring, 
constructing, and renovating facilities by enhancing the 
availability of loans or bond financing.
  [(b) Grantee Selection.--
          [(1) Evaluation of application.--The Secretary shall 
        evaluate each application submitted under section 5223, 
        and shall determine whether the application is 
        sufficient to merit approval.
          [(2) Distribution of grants.--The Secretary shall 
        award at least one grant to an eligible entity 
        described in section 5230(2)(A), at least one grant to 
        an eligible entity described in section 5230(2)(B), and 
        at least one grant to an eligible entity described in 
        section 5230(2)(C), if applications are submitted that 
        permit the Secretary to do so without approving an 
        application that is not of sufficient quality to merit 
        approval.
  [(c) Grant Characteristics.--Grants under this subpart shall 
be of a sufficient size, scope, and quality so as to ensure an 
effective demonstration of an innovative means of enhancing 
credit for the financing of charter school acquisition, 
construction, or renovation.
  [(d) Special Rule.--In the event the Secretary determines 
that the funds made available under this subpart are 
insufficient to permit the Secretary to award not less than 
three grants in accordance with subsections (a) through (c), 
such three-grant minimum and subsection (b)(2) shall not apply, 
and the Secretary may determine the appropriate number of 
grants to be awarded in accordance with subsection (c).

[SEC. 5223. APPLICATIONS.

  [(a) In General.--To receive a grant under this subpart, an 
eligible entity shall submit to the Secretary an application in 
such form as the Secretary may reasonably require.
  [(b) Contents.--An application submitted under subsection (a) 
shall contain--
          [(1) a statement identifying the activities proposed 
        to be undertaken with funds received under this 
        subpart, including how the eligible entity will 
        determine which charter schools will receive 
        assistance, and how much and what types of assistance 
        charter schools will receive;
          [(2) a description of the involvement of charter 
        schools in the application's development and the design 
        of the proposed activities;
          [(3) a description of the eligible entity's expertise 
        in capital market financing;
          [(4) a description of how the proposed activities 
        will leverage the maximum amount of private-sector 
        financing capital relative to the amount of government 
        funding used and otherwise enhance credit available to 
        charter schools;
          [(5) a description of how the eligible entity 
        possesses sufficient expertise in education to evaluate 
        the likelihood of success of a charter school program 
        for which facilities financing is sought;
          [(6) in the case of an application submitted by a 
        State governmental entity, a description of the actions 
        that the entity has taken, or will take, to ensure that 
        charter schools within the State receive the funding 
        the charter schools need to have adequate facilities; 
        and
          [(7) such other information as the Secretary may 
        reasonably require.

[SEC. 5224. CHARTER SCHOOL OBJECTIVES.

   [An eligible entity receiving a grant under this subpart 
shall use the funds deposited in the reserve account 
established under section 5225(a) to assist one or more charter 
schools to access private sector capital to accomplish one or 
both of the following objectives:
          [(1) The acquisition (by purchase, lease, donation, 
        or otherwise) of an interest (including an interest 
        held by a third party for the benefit of a charter 
        school) in improved or unimproved real property that is 
        necessary to commence or continue the operation of a 
        charter school.
          [(2) The construction of new facilities, or the 
        renovation, repair, or alteration of existing 
        facilities, necessary to commence or continue the 
        operation of a charter school.

[SEC. 5225. RESERVE ACCOUNT.

  [(a) Use of Funds.--To assist charter schools to accomplish 
the objectives described in section 5224, an eligible entity 
receiving a grant under this subpart shall, in accordance with 
State and local law, directly or indirectly, alone or in 
collaboration with others, deposit the funds received under 
this subpart (other than funds used for administrative costs in 
accordance with section 5226) in a reserve account established 
and maintained by the eligible entity for this purpose. Amounts 
deposited in such account shall be used by the eligible entity 
for one or more of the following purposes:
          [(1) Guaranteeing, insuring, and reinsuring bonds, 
        notes, evidences of debt, loans, and interests therein, 
        the proceeds of which are used for an objective 
        described in section 5224.
          [(2) Guaranteeing and insuring leases of personal and 
        real property for an objective described in section 
        5224.
          [(3) Facilitating financing by identifying potential 
        lending sources, encouraging private lending, and other 
        similar activities that directly promote lending to, or 
        for the benefit of, charter schools.
          [(4) Facilitating the issuance of bonds by charter 
        schools, or by other public entities for the benefit of 
        charter schools, by providing technical, 
        administrative, and other appropriate assistance 
        (including the recruitment of bond counsel, 
        underwriters, and potential investors and the 
        consolidation of multiple charter school projects 
        within a single bond issue).
  [(b) Investment.--Funds received under this subpart and 
deposited in the reserve account established under subsection 
(a) shall be invested in obligations issued or guaranteed by 
the United States or a State, or in other similarly low-risk 
securities.
  [(c) Reinvestment of Earnings.--Any earnings on funds 
received under this subpart shall be deposited in the reserve 
account established under subsection (a) and used in accordance 
with such subsection.

[SEC. 5226. LIMITATION ON ADMINISTRATIVE COSTS.

  [An eligible entity may use not more than 0.25 percent of the 
funds received under this subpart for the administrative costs 
of carrying out its responsibilities under this subpart.

[SEC. 5227. AUDITS AND REPORTS.

  [(a) Financial Record Maintenance and Audit.--The financial 
records of each eligible entity receiving a grant under this 
subpart shall be maintained in accordance with generally 
accepted accounting principles and shall be subject to an 
annual audit by an independent public accountant.
  [(b) Reports.--
          [(1) Grantee annual reports.--Each eligible entity 
        receiving a grant under this subpart annually shall 
        submit to the Secretary a report of its operations and 
        activities under this subpart.
          [(2) Contents.--Each annual report submitted under 
        paragraph (1) shall include--
                  [(A) a copy of the most recent financial 
                statements, and any accompanying opinion on 
                such statements, prepared by the independent 
                public accountant reviewing the financial 
                records of the eligible entity;
                  [(B) a copy of any report made on an audit of 
                the financial records of the eligible entity 
                that was conducted under subsection (a) during 
                the reporting period;
                  [(C) an evaluation by the eligible entity of 
                the effectiveness of its use of the Federal 
                funds provided under this subpart in leveraging 
                private funds;
                  [(D) a listing and description of the charter 
                schools served during the reporting period;
                  [(E) a description of the activities carried 
                out by the eligible entity to assist charter 
                schools in meeting the objectives set forth in 
                section 5224; and
                  [(F) a description of the characteristics of 
                lenders and other financial institutions 
                participating in the activities undertaken by 
                the eligible entity under this subpart during 
                the reporting period.
          [(3) Secretarial report.--The Secretary shall review 
        the reports submitted under paragraph (1) and shall 
        provide a comprehensive annual report to Congress on 
        the activities conducted under this subpart.

[SEC. 5228. NO FULL FAITH AND CREDIT FOR GRANTEE OBLIGATIONS.

  [No financial obligation of an eligible entity entered into 
pursuant to this subpart (such as an obligation under a 
guarantee, bond, note, evidence of debt, or loan) shall be an 
obligation of, or guaranteed in any respect by, the United 
States. The full faith and credit of the United States is not 
pledged to the payment of funds which may be required to be 
paid under any obligation made by an eligible entity pursuant 
to any provision of this subpart.

[SEC. 5229. RECOVERY OF FUNDS.

  [(a) In General.--The Secretary, in accordance with chapter 
37 of title 31, United States Code, shall collect--
          [(1) all of the funds in a reserve account 
        established by an eligible entity under section 5225(a) 
        if the Secretary determines, not earlier than 2 years 
        after the date on which the eligible entity first 
        received funds under this subpart, that the eligible 
        entity has failed to make substantial progress in 
        carrying out the purposes described in section 5225(a); 
        or
          [(2) all or a portion of the funds in a reserve 
        account established by an eligible entity under section 
        5225(a) if the Secretary determines that the eligible 
        entity has permanently ceased to use all or a portion 
        of the funds in such account to accomplish any purpose 
        described in section 5225(a).
  [(b) Exercise of Authority.--The Secretary shall not exercise 
the authority provided in subsection (a) to collect from any 
eligible entity any funds that are being properly used to 
achieve one or more of the purposes described in section 
5225(a).
  [(c) Procedures.--The provisions of sections 451, 452, and 
458 of the General Education Provisions Act shall apply to the 
recovery of funds under subsection (a).
  [(d) Construction.--This section shall not be construed to 
impair or affect the authority of the Secretary to recover 
funds under part D of the General Education Provisions Act.

[SEC. 5230. DEFINITIONS.

   [In this subpart:
          [(1) Charter school.--The term ``charter school'' has 
        the meaning given such term in section 5210.
          [(2) Eligible entity.--The term ``eligible entity'' 
        means--
                  [(A) a public entity, such as a State or 
                local governmental entity;
                  [(B) a private nonprofit entity; or
                  [(C) a consortium of entities described in 
                subparagraphs (A) and (B).

[SEC. 5231. AUTHORIZATION OF APPROPRIATIONS.

  [For the purpose of carrying out this subpart, there are 
authorized to be appropriated $150,000,000 for fiscal year 2002 
and such sums as may be necessary for fiscal year 2003.]

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